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Channels of Distribution Project

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kyle bussino

on 26 November 2012

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Transcript of Channels of Distribution Project

Products and Distribution Channels Kyle Bussino
Period 9 Retail Channel Products Wholesaler Channel Products Granola Bars Frosted Flakes Cologne Wool Sweaters Flat Screen TV Baseball Caps Blue-Ray DVD Ipods Electric Guitar Cashmere Sweaters Direct Channel Products I would sell Ipods in the direct channel, because with new technology today people are now ordering electronics online all the time. Apple also has the money to be able to afford this route, and the more direct connection with the manufacturer blends well with the image the Apple already has. I would sell this product in the direct channel because the profit from the product would be enough to distribute. Also people do online shopping for cloths and perhaps using the more direct method, it could give the consumer more power to choose. Also the direct channel gives the sweater a more high class and special feel to it. Again this is an expensive product where the manufacturer could afford distribution because they will be making a good profit and is not something that everyone will be buying. The more direct route also gives a chance for the consumer to personalize their guitar. I would sell this product in the retail channel because people look for DVDs in retail stores mostly. Also people do not usually buy DVDs in bulk, but many people do buy them. Retail would take the pressure off the manufacturer to distribute all those DVDs and the consumer can easily find the DVDs as they are shopping for other things. I would sell flat screen TVs in the retail channel because
people usually go to retail stores to buy them and because the consumer usually wants to see the TV before they buy it. Also flat screen TVs are becoming something that everyone has and it would put stress on the manufacturer to try and figure out how to distribute such large and delicate objects to a lot of separate individuals like the manufacturer would have to do in a direct channel. I would sell baseball caps in the retail channel because people like to look at the caps and try them on like you can in a retail store. Also people do not usually buy them in bulk and they do not bring in enough product usually for the manufacturer to be able to distribute them by themselves. Similar to the baseball caps, I would sell wool sweaters in the retail channel because people want to try them on and they do not bring in a lot of profit. Wool sweaters are also not something bought in huge bulk amounts like many things that take the wholesaler channel are. I would granola bars in a wholesale channel because it is an item that it is often bought in bulk. Granola is also a food item that will not go bad for a while and thus it is safe to use in this channel which can take longer to actually reach the consumer. Even more is that when using the wholesaler channel the manufacturer is more likely to get paid with cash instead of credit. I would sell Frosted Flakes in the wholesaler channel for similar reasons as the Granola Bars. Frosted Flakes are a product that can be bought in bulk if a wholesaler chooses to sell them that way, and also they are a food that can last for a long time. Frosted flakes are also in high demand so they could not simply distributed to each individual by the manufacturer. I would sell cologne in the wholesaler channel for three reasons. The first is simply is because the the wholesaler channel pays cash more often. The second reason is that cologne is a product that people can and will buy in bulk sometimes, especially with the cheaper types like Axe. The third reason is that cologne also can be put on a shelf for a while and it wont lose any value, which might happen in a longer chain like the wholesaler channel. The Four Channels of Distribution 1. Direct distribution: A form of distribution where products or services go directly from the producer to the consumer. There are only two participants in this channel. 2. Indirect (Retail) distribution: A form of distribution that involves three participants: the manufacturer, the retailer, and the consumer. The retailer purchases goods from the manufacturer and then sells them to consumers. 3. Wholesale distribution: A form of distribution where there is a manufacturer, wholesaler, retailer, and a consumer. The wholesaler gets the goods from manufacturer, then the retailer purchases the goods from them, and then the retailer sells the goods to the consumer. 4. Agent channel: A form of distribution that adds yet another person into the chain. In this form, the retailer will higher a person called a jobber who helps them find the best prices from different wholesalers. Goods go from manufacturer to wholesaler, a jobber finds the right wholesalers, the retailers purchase the goods, and then sell them to the consumers, Which One Should You Choose? Product: The type and quality of product influences the way its distributed. For example some product, like certain foods, need to be sold very quickly and are better suited for smaller chains. Market: The market for the product is also important. It is important to know how much consumers are usually buying, at what prices, and where. For example, a company that sells toilet paper would probably want to use a channel that uses a retailer because most people buy their toilet paper from places like WalMart. Expenses: The expense of distribution often affect choice of channel. It can be more costly for manufacturers to use direct channels because they have to distribute to each individual, and so many manufacturers prefer to choose other methods so they can sell to a few large customers. For example, if a company that sold toothpaste had to deliver tooth paste to every household that wanted some it could end up spending huge amounts of money. Cooperation: The type of cooperations already set up between dealer and manufacturer will also decide the types of channel a manufacturer can use. If a manufacturer and a retailer have a good relationship then they will probably sell and buy directly from each other. Company: Information about the company itself is important to choosing a channel. What type of image the company has as well as its strengths and weaknesses should be considered. A company that represents smaller business and has good relations with consumers for example, may want to choose a channel that is more direct. Payment: Form of payment is another factor. Retailers often pay with credit and wholesalers generally pay with cash. Most manufacturers prefer to be paid in cash and while thus choose a channel that involves a wholesaler. Popularity: The popularity of the good being manufactured may also affect the choice in channel. If a good is real popular, retailers will often go straight to the manufacturers themselves, and manufacturers will often use them because if their product is popular they will have to distribute it on a large scale. Price & Profit: The price of a product and the profit a manufacturer can make of it affects the channel they choose. For example if a products price is low, then the manufacturer will be able to make the most profit usually by selling to a retailer in order to save on distribution expenses. Retailing: The details about the retailing system available to a manufacturer is also a factor. Things like the amount of space available, benefits offered, and popularity all are factors. If the retailing system available is not popular then a company will choose a more direct system. Resources: The amount of resources a company has affects the choice of channel. Sources smallbusiness.chron.com
blurtit.com The end Thank you
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