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Channels of Distribution

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Introduction

Channels of Distribution Channels of Distribution The channel of distribution is known as the route in which producers and manufacturers have to take to get their products to their consumers. Two things which producers and manufactures can consider are whether their channel of distribution is direct on indirect. A direct channel of distribution is where the product from a manufacturer is transferred to a consumer; an indirect channel of distribution is where the product is not straight away handed to the consumer but the product is sold on wards to the next stage and the cost increases. The four channels of distribution are: * Direct from the manufacturer to the consumer -mail-order goods * From the manufacturer, via the wholesaler , to the consumer - furniture * From the manufacturer via the wholesaler and the retailer, to the consumer- trainers * From the manufacturer, via the retailer, to the consumer - supermarket goods Through wholesalers Manufacturers can sell the products to a type of business known as wholesalers. A wholesaler is a type of business which specialises in selling to smaller shops and other traders. The wholesaler buys in bulk from manufacturers. Many shops can't buy directly from the manufacturer because their orders are too small. Kellogg's, for instance, is not prepared to pay the cost of delivering a few packets of Cornflakes to a small shop. Instead these small shops buy from a wholesaler. So the wholesaler acts as an intermediary or link between the retailer and the manufacturer. Compulearn will use software and computer wholesaler because the business will buy a lot of pc's so it is feasible to buy the pc's in bulk and because we will be giving a lot of software it would also be feasible to buy that in bulk too. Through retailers The retailer is a business which specialises in selling goods in even smaller quantities and higher prices, retailers such as Tesco's sell a range of products and its easier for businesses likes Tesco's to deal with manufacturer rather than going through the wholesaler. ...read more.

Middle

However this means that businesses like Tesco's will need to buy in bulk order from the manufacturer this maybe difficult for smaller businesses because its harder for small businesses to avoid holding lots of stock. Manufacturers may also reach smaller retailers by using sales force or sales team, this is a group of people in a business which specialise in selling its goods or services, the sales force will visit retailers and sell the products, and some businesses even use telesales where they call retailers and try and sell products over the phone. Manufacturers try and take the route of selling to retailers because manufacturers get better consumer feedback about the products, to get as many retailers to become a customer of the manufacturer, businesses will need to advertise to make sure sales force works. Another way manufactures can get products sold to retailers is by trade fair which is a type of market where manufacturers have stands and sell to retailers who visit the fair to buy stock to sell to consumers. An example of a trade fair is exhibition canters like the National Exhibition centre. Through agents An agent is an individual or business which sells a product on half of another business and receives a commission or payment for doing so, are given the rights to sell products by the manufacturer. Agents are similar to wholesalers and act as intermediaries, the advantage of having agents is that the cost of marketing the products are paid by the agent; this means that manufacturers have less costs and the marketing budget might not be large enough for the business to sell overseas. Agents also get paid a percentage of the value of every sale made, in other words this known as commission. Commission is a payment made to an agent to return for the sales of products. Directly to the consumer Direct to the consumer is very popular, this is because direct to mail is the fastest channel and is often cheapest for consumers. ...read more.

Conclusion

Directly to the consumer Direct to the consumer is very popular, this is because direct to mail is the fastest channel and is often cheapest for consumers. A manufacturer may produce a catalogue and sell by mail order , or business may make a website so products can be sold online to consumers, the advantage of doing this is that its cheaper both ways, however it can be difficult for consumers to shop around because usually consumers buy products which tangible and when buying from the internet products are intangible which means you can't touch the product, this may lead to consumers not sure of buying the particular product and also people buy directly from the manufacturer may not get good customer service. Choosing the channel of distribution How does a business choose which channel of distribution to use? Businesses need to think about which channel of distribution to use, they can do this by thinking about which channel of distribution would help the business maximize profit and what their target audience is so they can reach them by using the right channel of distribution. Compulearn will be using the channel of distribution which best suits Compulearn needs and that are; Manufacturer Retailer Consumer This is the best channel of distribution for Compulearn, mainly because Compulearn will be buying its products from the internet and then selling them at a store on Bell road where Compulearn's office is based. The products Businesses need to think about the different channels of distribution which will help them get the products to the consumer quickest, for example perishable products such as lettuces and oranges need to be transported to the consumer quickly before the product goes off or even out of date, so wholesalers, retailers and markets are the expertise in this type of distribution. For the products Compulearn will be selling easy to understand computer courses which be sold directly to the consumer and to large companies and the manufacturer will be selling to the company that provides us with the software and hardware needed. ?? ?? ?? ?? Aman Chandhok Business coursework ...read more.

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