Chapter 5.2 Channel Management

Functions of Business CONSUMER PRODUCTION Creating, growing, manufacturing or improving on goods & services Farmer grows corn Ford manufactures cars Boise Cascade cuts down trees processes and makes lumber……Home Depot buys lumber to sell to make homes. All PRODUCTION activities. CONSUMER Someone who purchases a good or service to satisfy his or her needs and wants.

An Industrial Manufacturer buys raw materials, services, and products to add value, and provide products sell to consumers Channel Members are called intermediaries that help move products through the distribution channel to the consumer.

Intermediaries Distributors Wholesalers Brokers Sales Agents Retailers

Direct Distribution Occurs when products are sold directly from the manufacturer to the consumer.

Indirect distribution - occurs when one or more intermediaries are involved.

The key consideration in distribution is cost. This involves the products physical characterists, and the transfer of ownership. These decisions affect a company’s logistics program.

Variable Distribution is used when a product meets both consumer and industrial markets. CONSUMER MARKET: Products that satisfy consumer needs and wants. INDUSTRIAL MARKET: Those who buy from or sell to one another for business purposes

Producers must weigh the profits they want to keep. Selective distribution involves protected territories in a given geographic areas. Intensive distribution involves the use of all suitable outlets to sell a product. Exclusive distribution means that a limited number of outlets in a given geographic area are used to sell a product exclusively.

E-Commerce Direct Operations Products are sold to consumers and industrial users through the use of the internet. Direct Operations Provide one-stop shopping and substantial savings for industrial buyers.