1.3.4 Distribution

• Four stage distribution channel (typical)

  producer, wholesaler, retailer, consumer

  groceries, clothing and electronics
• Wholesaler

  business that buys from manufacturer in bulk and sells in smaller quantities to retailers - COSTCO
• Three stage distribution channel

  producer, retailer, consumer

  products with high demand

  high profit margins

  Toshiba sells to Currys, to consumers
• Two stage distribution channel

  manufacturer selling to consumer

  products sold online

  Ryanair
• Changes in distribution to reflect social trends so business' can adjust their distribution strategies to better meet the needs of their customers and stay competitive in the marketplace
• Online distribution and its change to reflect social trends

  convenient

  drop-shipping, which allows them to sell products without holding stock

  • Once the business has sold the products, they are shipped directly from the producer to the customer
  • This reduces the cost and complexity of distribution, making it easier for businesses to sell online
  • AMAZON
• The Shift from Product-based Businesses to Service-based Businesses

  consumers value experiences over material possessions delivering services to customers directly, such as through a mobile app or website

  • This requires a different set of distribution capabilities than traditional product-based distribution
  • UBER delivers taxi service through mobile app
  • businesses' costs reduce
  • profitability increases
• Wholesaler

  A business that buys from the manufacturer in bulk and sells in smaller quantities to retailers.
• Producer

  The business that creates or manufactures the good. The producer uses raw materials and turns them into end finished products
• Retailer

  A business who sells products or provides service to end user.
• Agent

  A third party intermediary that a company can use to sell their products for them usually in a foreign or unfamiliar market.
• Consumer

  Customer