– Distribution channels
- Businesses (intermediaries) involved in moving goods from the manufacturer to the point of sale.
- Intermediaries can be wholesalers or retailers.
- Three main types of channels:
- Producer to consumer – involves no intermediaries; the good or service is produced by an individual/organisation and is then passed directly onto the consumer eg service industries.
- Producer to retailer to consumer – retailer is the intermediary and accesses goods from the producer, usually in bulk then sells to consumer.
- Producer to wholesaler to retailer to consumer – wholesaler buys in bulk from producer and resells in smaller quantities to retailers.
– Channel choice – intensive, selective, exclusive
Channel choice will influence the type of consumers the product attracts, its perception in the market and its accessibility.
- Intensive –widely available and in as many outlets as possible (g. milk)
- Selective – available in limited number of outlets in a geographical area, using the most appropriate and best performing outlets.
- Exclusive – individual outlets are given exclusive distribution rights, usually used for expensive products or where specialist skills are required.
– Physical distribution issues – transport, warehousing, inventory
The activities involved in efficiently moving products from producer to consumer.
- Method chosen (rail, road, air, sea) will depend on type of good, cost, necessary speed of delivery and distance to be covered.
- Involves storing products in a secure manner, with ready access to they can be easily dispatched to retailers in smaller quantities when needed.
- Inventory control ensures products are available for sale when needed so sales are not lost, without the issue of having too much stock and high storage costs.
Extract from Business Studies Stage 6 Syllabus. © 2010 Board of Studies NSW.