1.3.4 Distribution

• Distribution channels


  refer to the various intermediaries through which goods/services move from the manufacturer to the end customer 
• 4 stage distribution channel

  • manufacturer, wholesaler, retailer, and consumer
  • commonly used for products such as groceries, clothing, and electronics
  • manufacturer deals with few wholesalers & sell in large quantities
  • wholesalers break bulk orders into smaller quantities that independent retailers will buy
• 3 stage distribution channel

  • Manufacturer - Retailer - Consumer
  • often used for products with high demand or where the cost of distribution is high
  • used in mass market products
  • gives manufacturer the volume of sales they are looking for
• 2 stage distribution channel

  • Manufacturer - consumer
  • commonly used for products that are sold online or through direct sales channels
  • may not be able to sell in large quantitites
• Benefits of multichannel distribution

  • increased customer reach - reach multiple segments of market. Target customers who prefer online shopping etc..
  • Ensures business is present - adapt to social trends & expand customer base
• Benefits of multichannel distribution

  • enhanced customer convenience - offers flexibility & convenience for customer to choose the channel that best suits them. Customers appreciate that they can interact with brand (mobile apps)
  • Improved sales opportunities - multiple channels means business can capture sales they would have missed
• Benefits of multichannel distribution

  • Adaptability - to market trends, test new channels & experiment different strategies.
  • helping them stay competitive in markets
• benefits of multi channel distribution

  • Cross channel promotion & synergies - use physical stores as showrooms & provide exclusive discounts online.
  • encourages customers to explore multiple channels, increasing sales
  • Rich customer insights - helps gain understanding of customers, allowing more targeted strategies, personalised recommendations & customer segmentations
• growth of e-commerce & distribution

  • businesses now use drop-shipping, which allows them to sell products without holding stock
  •  reduces the cost and complexity of distribution, making it easier for businesses to sell online
• shift from product to service & its impact on distribution

  • customers value experiences over material possession- delivery of services is often quite different from the delivery of physical products
  • service-based businesses may deliver services to customers directly (mobile app or website)
  • different set of distribution capabilities than traditional product-based distribution