Distribution

• Distribution channel = the network of businesses or intermediaries through which a good or service passes until it reaches the end consumer.
• Intermediaries - organisations that act between producers and customers
• Direct distribution - when goods are sold directly to consumers without any intermediary
• Indirect distribution - where an organisation sells its products via one or more intermediaries, such as wholesalers or retailers
• Four Stage Distribution Channel

  • A traditional channel consists of four stages: producer, wholesaler, retailer, and consumer
  • This channel is commonly used for products such as groceries, clothing, and electronics
  • E.g. The Coca-Cola Company produces the soft drink and then sells it to a wholesaler, who in turn sells it to a retailer
  • The retailer then sells the soft drink to the end customer
• Three Stage Distribution Channel

  • The three stage distribution channel eliminates the wholesaler stage, with the producer selling directly to the retailer
  • This channel is often used for products with high demand or where the cost of distribution is high
  • This channel is often used for products with high profit margins, where the manufacturer can afford to sell directly to the retailer and still make a profit
• Two Stage Distribution Channel

  • The two stage distribution channel eliminates both the wholesaler and retailer stages, with the manufacturer selling directly to the end consumer
  • This channel is commonly used for products that are sold online or through direct sales channels