Distribution Channels and Wholesalers

Study Notes

Producer to Consumer: Direct sales without intermediaries, e.g., purchasing directly from a brand’s website.
Producer to Retailer to Consumer: Involves retailers as intermediaries for bulky products, e.g., cars and furniture, where additional handling increases costs.
Producer to Wholesaler to Retailer to Consumer: Wholesalers sell to other businesses, e.g., for products like chewing gum, which are too many for producers to handle alone.
Producer to Agent to Wholesaler to Retailer to Consumer: Agents facilitate sales without taking ownership; used for seasonal products and companies lacking a sales force.
Producer to Organizational Buyer: Manufacturers' sales force sells directly to business users; common for heavy machinery and airplanes.
Multiple Channels: Manufacturers often utilize various distribution strategies for different market segments.

Services to Retailers:
- Buy in bulk, then sell smaller quantities to retailers.
- Provide delivery and stock diverse products from multiple producers.
- Offer assistance with promotion, market information, and financial support.
Services to Manufacturers:
- Similar support as provided to retailers.
- Maintain a sales force, reduce inventory costs, and manage credit risks.

Merchant Wholesalers: Purchase large quantities to sell to other businesses, operating warehouses for storage.
Full-service Wholesalers: Provide comprehensive functions, including general, limited, and specialty line wholesalers.
Agents and Brokers: Agents represent buyers or sellers, typically on a commission; brokers specialize in commodities and often work temporarily.

Independent Retailer: Operates one retail outlet; provides unique, personalized shopping experiences.
Chain Retailer: Operates multiple outlets; emphasizes brand consistency across locations.
Department Stores: Large stores with departments for various product categories, e.g., Woolworths.
Discount Stores: Self-service outlets offering products at lower prices, e.g., The Crazy Store.

Planned Shopping Centres: Retail facilities designed by independent owners; include several store types:
- Lifestyle Centres: Upscale stores in an open-air setting.
- Neighborhood Centres: Small convenience and specialty stores.
- Community Centres: Include department and specialty stores plus convenience shops.
- Regional Centres: Large shopping facilities with diverse offerings including department stores and restaurants.

Definition: Refers to all activities necessary for moving products from producers to users.
Key Functions:
- Inventory management.
- Order processing.
- Warehousing.
- Materials handling.
- Transportation.

Focus: Balancing inventory costs, including holding costs (storage, insurance, taxes) and minimizing stockout costs which lead to lost sales.

Factors Influencing Choice: Objectives, product characteristics, target market profiles, and competitive environment.
Common Methods:
- Rebate: Partial refund from purchase price.
- Coupon: Discounts applied at purchase.
- Sample: Free products to promote trial.
- Premium: Gifts given for product purchases.
- Frequent-user Incentive: Rewards for repeat purchases.
- Point-of-Purchase Display: In-store promotional materials.
- Trade Show: Exhibitions for many sellers to present products.
- Buying Allowance: Temporary price reductions for bulk purchasing.
- Cooperative Advertising: Manufacturer contributes to retailer's ad costs.