What are distribution channels?

Summary

This script explores distribution channels, the pathways businesses use to deliver products to consumers. It outlines three main types: direct sales, through retailers, and via wholesalers and retailers. Factors influencing channel choice include distribution costs, market nature, and the producer's desire for marketing control. Examples like Dell Computers for direct sales and large retailers for modern distribution are provided. The script challenges viewers to consider the best distribution methods for products like double-decker buses, washing powder, and dog herbal remedies, encouraging further learning at learnloads.com.

Takeaways

• 🔗 Distribution channels are the pathways businesses use to deliver products to consumers.
• 🛒 There are three main types of distribution channels: direct to consumer, via retailers, and via wholesalers and retailers.
• 🏭 Direct sales are suitable for niche products with low volume sales and can be facilitated through online platforms, mail order, or manufacturer-owned shops.
• 🛍️ Retailer distribution involves large retailers purchasing goods directly from manufacturers and selling to consumers, leveraging bulk buying power for discounts.
• 🛒 Wholesaler and retailer distribution is a traditional method where wholesalers buy in bulk from producers and sell to various retail businesses.
• 💼 The choice of distribution method is influenced by distribution costs, market nature, and the producer's desire for marketing control.
• 🚚 Using intermediaries like wholesalers can reduce delivery costs for producers but also means sharing profit with each intermediary in the chain.
• 🏬 Direct selling can be attractive if customers are willing to visit a producer's outlet, as seen with 'pick your own' fruit farms.
• 🌍 High volume, mass-market products are typically distributed through retailers due to the wide consumer base.
• 🏭 Industrial goods with a small customer base may consider direct distribution due to the simplicity of reaching fewer customers.
• 🎯 Some producers prefer direct distribution for the control it offers over product promotion and pricing strategies.

Q & A

What is the definition of distribution channels?

Distribution channels are the means by which businesses get products to their consumers, involving links in a chain of distribution as products are sold between different businesses on their way to the final consumer.

How many main types of distribution channels are there?

There are three main types of distribution channels: direct to the consumer, to the consumer via retailers, and to the consumer via wholesalers and retailers.

What are the examples of businesses that sell directly to the consumer?

Well-known examples of businesses that sell directly to the consumer include direct line insurance and Dell computers.

What is the advantage of selling products through large retailers?

Large retailers have enough buying power to negotiate bulk discount prices with producers, which benefits the producer by allowing them to focus on making the product without needing complicated distribution systems.

How does distribution via wholesalers and retailers work?

In this type of distribution channel, wholesalers purchase in bulk from producers and then sell smaller batches to many different retail businesses, such as independently owned convenience, grocery stores, and pet shops.

What factors influence the choice of distribution method?

Decisions about distribution methods are influenced by the cost of distribution, the nature of the market, and the extent to which the producer wishes to control how products are marketed.

Why might a producer choose to sell directly to the consumer?

A producer might choose direct selling if customers are willing to come to a factory shop or outlet controlled by the producer, which can reduce the cost of distribution and give the producer more control over marketing.

What is the significance of the market size in choosing a distribution method?

High volume mass market products need to be sold to a large number of customers, making distribution through retailers more feasible, while direct distribution becomes more viable for products with a smaller customer base.

How does using intermediaries affect a producer's control over product promotion and pricing?

Using intermediaries like wholesalers and retailers means handing over some control over promotion and pricing to these intermediaries, which can be advantageous for promotion but may not always align with the producer's marketing strategies.

What are the potential benefits and drawbacks of using intermediaries in distribution?

Benefits include reduced delivery costs as fewer deliveries are needed, while drawbacks include the need to share profits with intermediaries and potentially less control over how products are marketed.

Can you suggest the best way to distribute double-decker buses, washing powder, and herbal remedies for dogs based on the script?

Double-decker buses might be best distributed directly to public transport authorities or via specialized vehicle retailers. Washing powder, being a high-volume consumer good, is likely best sold through retailers. Herbal remedies for dogs could be distributed directly if targeting a niche market or via pet specialty stores for broader reach.

Outlines

00:00

📦 Understanding Distribution Channels

This paragraph explains the concept of distribution channels, which are the methods businesses use to deliver products to consumers. It outlines three main types of distribution channels: direct to the consumer, via retailers, and via wholesalers and retailers. Direct sales are suitable for niche products with low volume sales and can occur online, through mail order, or in manufacturer-owned shops. Retailer distribution involves large retailers purchasing goods from manufacturers and selling to consumers, offering benefits like bulk discounts. The traditional distribution channel through wholesalers and retailers involves at least two intermediaries, allowing manufacturers to reach small retail businesses without high transport costs. Factors influencing the choice of distribution method include distribution costs, market nature, and the producer's desire for marketing control. Examples like direct line insurance, Dell computers, and 'pick your own' fruit farms are given to illustrate direct sales, while the necessity of intermediaries for high-volume consumer goods like toothpaste is discussed.

05:03

🛒 Choosing the Right Distribution Strategy

The second paragraph delves into the decision-making process for selecting a distribution channel, emphasizing that choices are influenced by cost, market characteristics, and the level of marketing control desired by the producer. It invites the audience to consider the best distribution methods for specific products: double-decker buses, washing powder, and herbal remedies for dogs. The paragraph reinforces the idea that distribution strategies must be tailored to the product type and market conditions, suggesting that different products may benefit from different channels. It also directs interested individuals to 'learnloads.com' for further information.

Keywords

💡Distribution

Distribution refers to the process by which products are made available to end-users or consumers. In the context of the video, distribution is a critical component of the supply chain, linking manufacturers to consumers. It involves various channels and methods, such as direct sales, retail, and wholesale, which are discussed in detail to illustrate how businesses get their products to the consumers.

💡Distribution Channels

Distribution channels are the pathways through which goods and services move from the producer to the end consumer. The video script explains that there are three main types of distribution channels: direct to the consumer, via retailers, and via wholesalers and retailers. Each channel has its advantages and is chosen based on factors like cost, market nature, and the producer's desire for marketing control.

💡Direct Sales

Direct sales is a distribution method where products are sold directly to consumers without intermediaries. The video gives examples such as online sales, mail order, and manufacturer-owned shops. This approach allows businesses to have more control over their products and marketing, as seen with direct line insurance and Dell computers.

💡Retailers

Retailers are businesses that sell goods to consumers for personal use. In the distribution context, retailers often act as intermediaries, purchasing products from manufacturers and then selling them to end-users. The video mentions large retailers' buying power, which allows them to negotiate bulk discounts, benefiting both the producer and the retailer.

💡Wholesalers

Wholesalers are businesses that buy products in large quantities from manufacturers and then sell them in smaller quantities to retailers. The video explains that this traditional distribution method is effective for manufacturers to get their products into small retail businesses without incurring high transportation costs for small deliveries.

💡Chain of Distribution

The chain of distribution refers to the sequence of intermediaries through which a product passes from the producer to the end consumer. The video script outlines how products are sold between different businesses before reaching the final consumer, highlighting the importance of each link in the chain for efficient distribution.

💡Intermediaries

Intermediaries are entities such as retailers and wholesalers that facilitate the movement of goods from producers to consumers. The video discusses how intermediaries play a crucial role in distribution by taking on the responsibility of selling products to the end-users, which can reduce the cost and complexity for producers.

💡Cost of Distribution

The cost of distribution encompasses all expenses associated with making products available at the points of sale. The video script highlights that decisions about distribution channels are influenced by distribution costs, which can vary depending on whether the product is sold directly or through intermediaries.

💡Market Nature

Market nature refers to the characteristics of the market in which a product is being sold, such as the size of the market, the number of potential customers, and the geographical spread. The video explains that the nature of the market is a significant factor in determining the most effective distribution channel, with different channels suitable for different market conditions.

💡Control Over Marketing

Control over marketing refers to the degree to which a producer can influence the promotion, pricing, and presentation of their products. The video script discusses how using intermediaries can mean handing over some control to them, which might be advantageous for promotion but could also limit the producer's ability to manage their product's market presence.

💡Industrial Goods

Industrial goods are products that are used in the production of other goods or services, rather than being consumed by the end-user. The video mentions that producers of industrial goods, such as airplanes or industrial robots, may consider direct distribution due to having a small number of customers, making the distribution process less complex compared to consumer goods.

Highlights

Distribution channels are the means by which businesses get products to their consumers.

There are three main types of distribution channels: direct to the consumer, via retailers, and via wholesalers and retailers.

Direct sales can be made online, through mail order, or through shops owned by the manufacturer.

Businesses selling direct do not rely on shops or other intermediaries to sell their product.

Well-known examples of direct sales include direct line insurance and Dell computers.

Distribution via retailers involves large retailers purchasing goods from manufacturers and selling to consumers.

Large retailers have buying power to negotiate bulk discount prices with producers.

Producers benefit from concentrating on making the product without needing complicated distribution systems.

Distribution via wholesalers and retailers involves at least two intermediaries.

Wholesalers purchase in bulk from producers and sell smaller batches to retail businesses.

Using wholesalers is effective for manufacturers to get products stocked in small retail businesses without high transport costs.

Decisions on distribution methods are influenced by the cost of distribution, the nature of the market, and the producer's desire for marketing control.

Producers using intermediaries like wholesalers and retailers reduce the number of deliveries needed.

Intermediaries seek to make a profit, which means the purchase price they pay is less than what producers might charge if selling direct.

Direct selling can be attractive if customers are willing to come to a factory shop or outlet controlled by the producer.

High volume mass market products are often distributed through retailers due to the large customer base.

Producers of industrial goods may consider direct distribution because they have a small number of customers.

Using intermediaries means handing over some control over promotion and pricing to them.

For some producers, only direct distribution provides the control over marketing they seek.

Distribution channel decisions are influenced by cost, market nature, and the producer's marketing control preferences.

Transcripts

what are distribution

channels distribution channels are the

means by which businesses get products

to their

consumers distribution involves links in

a chain of distribution as products are

sold between different businesses on

route to the final consumer there are

three main types of distribution channel

one direct to the consumer two to the

consumer via retailers three to the

consumer via wholesalers and

retailers let me say a little about each

of these firstly

direct Niche products with relatively

low volume sales are often sold direct

direct sales could be made online

through mail order or through shops

owned by the

manufacturer businesses selling direct

do not rely on shops or other

intermediaries to sell their product

well-known examples of businesses that

sell direct to the consumer are direct

line insurance and Dell

computers distribution via

retailers large retailers often purchase

goods from manufacturers and sell on to

Consumers this method of distribution is

sometimes called modern

distribution products reach consumers

via one

intermediary large retailers have enough

buying power to to negotiate bulk

discount prices with producers the

producer benefits by being able to

concentrate primarily on making the

product without needing complicated

Distribution Systems to supply thousands

or millions of

customers producers just distribute to a

much smaller number of

retailers distribution via wholesalers

and

retailers this type of distribution

Channel involves at least two

intermediaries wholesalers and retailers

this is sometimes called traditional

distribution wholesalers are businesses

that purchase in considerable bulk from

producers and then sell smaller batches

to many different retail businesses for

instance independently owned convenience

grocery stores and Pet Shops usually buy

their stock from

wholesalers using wholesalers is an

effective way for manufacturers to get

products stocked in small retail

businesses without having the transport

cost involved in making small deliveries

to each of

them what factors will influence which

method of distribution is

chosen decisions are influenced by the

cost of distribution the nature of the

market and the extent to which the

producer wishes to control how products

are

marketed as already mentioned an

advantage to producers of using

wholesale saers and larger retailers is

that far fewer deliveries need to be

made than would be needed if the

delivery were straight to the consumer

this reduces the cost of

distribution on the other hand each

intermediary involved in the chain of

distribution seeks to make a profit the

purchase price that retailers and

wholesalers pay is inevitably less than

the price that producers might charge if

they were selling direct to the

consumer if customers are prepared to

come to a factory shop or some other

Outlet controlled by the producer then

DirectX selling might look attractive a

classic example of this is the pick your

own Fruit

Farm high volume mass market products

have to be sold often to a very large

number of customers there's no such

thing as a local toothpaste manufacturer

for instance the market for this sort of

goods is National or possibly

International for that that reason it

usually makes sense to distribute M

market products through

retailers on the other hand if a market

has a smaller number of customers direct

distribution becomes more

feasible producers of industrial goods

like airplanes or industrial robots May

seriously consider direct distribution

because they have a small number of

customers getting these products to the

consumer is in some ways far less

complex than delivering consumer Goods

to millions of

people whenever a producer uses an

intermediary to sell its products it's

handing a degree of control over

promotion and price to the intermediary

this may be to the advantage of the

producer being stocked in an established

national retail chain can mean that the

product is well

promoted on the other hand the way that

an intermediary like a retailer markets

a product may not suit the produc

producer for some producers only direct

distribution provides them with the

control over marketing that they

seek so to sum up distribution channels

are the means by which businesses get

products to their consumers there are

three main types of distribution on

channel Direct via retailers via

wholesalers and

retailers decisions made about how a

product is distributed are influenced by

the cost of distribution the nature of

the market and the extent to which the

producer wishes to control

marketing you might like to try this

activity suggest with reasons the best

way to distribute the following products

a double decker buses B washing powder C

herbal remedies for

dogs to find out more visit learn

loads.com