Fundamentals of Business

Traditional perspective

Traditional perspective distribution has been seen as dealing with logistics: how to get the product or service to the customer. It must answer questions such as:
√ Should the product be sold through a retailer?

√ Should the product be distributed through wholesale?

√ Should multi level marketing channels be used? How long should the channel be (how many members)?

√ Where should the product or service be available?

√ When should the product or service be available?

√ Should distribution be exclusive, selective or extensive?

√ Who should control the channel?

√ Should channel relationships be informal or contractual?

√ Should channel members share advertising?

√ Should electronic methods of distribution be used?

√ Are there physical distribution and logistical issues to deal with?

√ What will it cost to keep an inventory of products on store shelves and in channel warehouses (filling the pipeline)?

The distribut distribution (Marketing) channel

Frequently there may be a chain of intermediaries, each passing the product down the chain to the next organization, before it finally reaches the consumer or end user. This process is known as the 'distribution or marketing chain' or the 'channel'. Each of the elements in these chains will have their own specific needs, which the producer must take into account, along with those of the all important end user.

A number of alternate 'channels' of distribution may be available:
√ Selling direct, such as via mail order, Internet and telephone sales

√ Agent, who typically sells direct on behalf of the producer

√ Distributor (also called wholesaler), who sells to retailers

√ Retailer (also called dealer), who sells to end customers