BUSINESS W8-9: Distribution

Channel of distribution

The path a product takes from the producer to the ultimate user.

Distribution mix

The combination of middlemen and channels that a producer uses to get a product to end users.

Middlemen

Businesspeople who channel goods and services from producers to consumers.

Wholesalers

Firms that sell products to other firms (retailers, other wholesalers, industrial users) for resale or for industrial use.

Retailers

Firms that sell directly to the public.

Merchant wholesalers

Independent wholesalers that take legal title to the products they sell.

Rack jobbers

A type of merchant wholesaler responsible for setting up and maintaining displays (e.g., in a specific section of a store).

Agents

Wholesalers that do not take title to products but receive a commission for selling them.

Brokers

A type of agent that specializes in a particular commodity (e.g., real estate, insurance).

Branch office

A wholesale operation owned by the producer that carries stock and sells products.

Sales office

A wholesale operation owned by the producer that does not carry stock but takes orders.

Intensive distribution

An approach that involves placing the product in nearly every available outlet to saturate the market.

Selective distribution

An approach that relies on a limited number of outlets that can give the product adequate support.

Exclusive distribution

An approach where middlemen are given the exclusive right to sell a product within a given geographic area.

Department stores

Large retail stores that carry a wide variety of high-quality merchandise under one roof, organized into departments.

Scrambled merchandising

A policy of a retailer carrying merchandise that is ordinarily sold in a different type of outlet (e.g., a department store selling food).

Discount stores

Retailers that sell a variety of goods below the market price by keeping their overhead low.

Wheel of retailing

The evolutionary process by which stores that feature low prices are gradually upgraded until they forfeit their appeal to price-sensitive shoppers and are replaced by new, lower-priced competitors.

Off-price stores

Retailers that offer bargain prices by maintaining low overhead and acquiring merchandise at below-wholesale costs (e.g., overstock, irregulars).

Gray market outlet

A retail establishment that obtains products (often electronics) at a steep, unauthorized discount and resells them at a bargain price.

Trans-shipping

The practice of a dealer purposely ordering far more of a product than needed to obtain a volume discount, then selling the excess to a gray marketer.

Warehouse clubs

Low-priced stores that sell memberships and sell merchandise in bulk, often from warehouse-style facilities.

Catalog showrooms

Retail stores where customers browse through catalogs and then receive the items they select from an on-premises warehouse.

Variety stores

Stores that sell a wide selection of low-priced items (the traditional \"five-and-dime\" store).

Specialty stores

Stores that carry only particular types of goods but offer an extensive selection within that line.

Supermarkets

Large, departmentalized food stores that emphasize self-service.

Convenience stores

Food stores whose chief advantage is time and place utility, often open long hours with higher prices.

Mail-order firms

Companies that sell products through catalogs and ship them directly to customers by mail.

Physical distribution

All the activities required to move finished products efficiently from the producer to the consumer.

Order processing

The functions involved in receiving and handling a customer's order.

Warehouse

A facility for storing backup stocks of supplies or finished products.

Distribution centers

A type of warehouse that specializes in collecting and shipping merchandise, acting as a command post for moving products.

Containerization

A materials handling method that uses large, standard-sized sealed containers for shipping merchandise, which are transferred between trucks, ships, and trains without being opened.