1.3.4 Distribution

What is distribution?

Distribution is making products and services available to customers where and when they need it

What is a distribution channel?

The path a product takes from producer to consumer. A distribution channel moves a product through the stages from production to final consumption.

What are the common distribution channels?

• Four stage distribution

• Three stage distribution

• Two stage distribution

What is the four stage distribution channel?

• Consists of four stages: producer, wholesaler, retailer and consumer

• This channel is commonly used for products such as groceries, clothing and electronics

What is the three-stage distribution channel?

• The three stage distribution channel eliminated the wholesaler stage: producer, retailer and consumer

• This channel is often used for products with high demand or where the cost of distribution is high

• Often used for products with high profit margins, where the manufacturer can afford to sell directly to the retailer and still make a profit

What is the two-stage distribution channel?

• The two-stage distribution channel eliminates both the wholesales and retailer stages: producer to consumer

• This channel is commonly used for products that are sold online

How have changes in distribution been impacted by social trends?

• The growth of e-commerce (more convenient and accessible to consumers, products are shipped directly from the producer to the consumer)

• The shift from product based businesses to service based businesses (consumers value experiences over material possessions, mainly involves delivery services to customers directly)