Channels Of Distribution.pptx

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AHSAN ABBAS SAJID KARIM M FARHAN AFZAL MUJAHID MEHMOOD

Mi17MBA055 Mi17MBA054 MI17MBA032 MI17MBA007

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Manufacture and consumer are two major components of the market. Intermediaries perform the duty of eliminating the distance between the two. There is no standardized level which proves that the distance between the two is eliminated

As you know the main objective of all business enterprise is to earn profit by selling of goods and services to ultimate consumer s or users. In order to bring goods from the place of manufacture to the place of consumers, the goods have to follow a path or route which is known as channel of Distributions.

A channel of distribution or trade channel is the path or route along which goods move from producers to ultimate consumers or industrial users. It is a distribution network through which a producer put his products in the and of actual users.

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Physical movement of complete products Actual transfer of ownership Information about potential buyers Promotion Payment of invoices Negations Risk taking realisation order

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CONSUMER CHANNELS BUSINESS TO BUSINESS CHANNELS SERVICES CHANNELS

Producer direct to consumer  Producer to retailer to consumer  Producer to wholesaler to retailer to consumer  Producer to agent to wholesaler to retailer to consumer 

Cutting out the distributor profit margin may make this option more attractive to producer as the can sell directly to consumer. Many companies like Charles Tyrwhitt and Apple have adopted this approach. It also helped digital products like music and films as the can now provide a readily available download at the customer’s computer. Seen as well by the use of the internet takes out the needs for an intermediary retail stores as it can just be bought online from the producers

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With the growth in retailer size this has meant that it as become more economical for producers to supply retailers directly rather than through wholesalers. Consumers then have the convenience of viewing and/or testing the product at the retailer outlet before they purchase anything .

For small retailer such as news stores with limited order quantities available to them; the use of wholesaler makes goods economics sense. Wholesaler can numerous retailer. They only downfall of this is larger retailers have powers to buy directly from the producers therefore cutting out the wholesaler and their margins therefore undercutting competition.

PRODUCER

WHOLESALER

Retailer

CONSUMER

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This seems is very long winded channel which may not work effectively in your homeland but is actually used regularly for entraining foreign markets. Producer may delegate the task of selling a product of an agent, who than a contact a wholesaler or retailer to sell the products for a commission on the sales. This way producers can concentrate on their dominant market and the initial work entering into a foreign market is done by the agent

Producer

Agent

Wholesaler

RETAILER

CONSUMER

PRODUCERS TO BUSINESS  PRODUCER TO AGENT TO BUSINESs  PRODUCERS TO DISTRIBUTOR TO BUSINESs  PRODUCER TO AGENT TO DITRIBUTOR TO BUSINESS 

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This is common used for expensive industrial products such as gas turbines aero engines and manufacturing machinery. A close liaison is needed between the supplier and the customer to solve technical problems which may arise.

A producer could use their own sales force like agents, who may sell several goods on behalf of a company. A disadvantage could be however the title control you will have over these agents, they must be a trusted source who will respect you brand and portray it how you want.

Implemented for less expensive; more frequently used B2B products. The use internal and external staff means the distributor can deal with their own clients bases in house as well as finding new prospects and leads externally. The advantage of this channel is for businesses that are able to buy in smaller quantities and source more locally

This is where business customers prefer to call upon distributors; the agent’s job will require selling into these intermediaries. The reason why a producer may employ an agent rather a dedicated sales force is usually cost based.

PRODUCER

AGENT

Distributor

Business

Service provider to customer  Service provider to agent to customer 

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The close personal relationships between service provides and customers often means that services supply is direct such as healthcare, office cleaning and accounting

If you are to use a channel intermediary you will take the form o an agent. These are used when the services provider is geographically distant from customers and where it is not economical for the provider to establish is own local sales team.