1. Distribution #73- Explain the concept of distribution
#74- Identify the channels of distribution

2. Concept of Distribution
Movement of products from source of production to final user
Products move through “channels”
Includes selection and use of distribution activities: transportation, storage, outlets, and intermediaries

3. Distribution Activities
Transportation- method(s) shipping/delivering products to destination SEA, AIR, RAIL, TRUCK,
Storage – warehouses for storing
Outlets- where products are sold
Intermediaries – individual or firm that links producers to other intermediaries or the final consumer

4. Concept of Distribution
When final user of product is for a business industrial user.
When final user of product is used for personal use, it is called a consumer
Industrial User
Consumer

5. Channel Members Called intermediaries – or middlemen
Reduce the number of contacts required to reach the final user of the product
Major classifications: wholesaler or retailer

6. Wholesaler
Person or firm that buys products in large quantities from various suppliers, warehouses them and re-sells to retailers.

7. Channels and Channel Members

8. Wholesaler Buys in large quantities from manufacturers
Stores the goods
Resells them to other businesses

9. Retailers Purchases from intermediary and re-sells
Sells goods to final consumer

10. Direct and Indirect Channels
Direct Distribution- occurs when the producer sells goods or services directly to the consumer with no intermediaries
Indirect Distribution-involves one or more intermediaries

11. Concept of Distribution
Distribution decisions all made with target market in mind.
Consider the following:
How is each distribution activity important to business?
How does the target market of a product affect its transportation?
How does the target market affect the use of channel intermediaries?

12. Class Assignment
Work with a partner. Trace the distribution channel of selected product from producer to final consumer.
Identify how each intermediary (or channel member) marks up the price to make a profit and how that impacts the price to the final consumer.
Prepare in a PPT slide or presentation.