Channels Of Distribution

3 Pages 864 Words

Abstract
In reading the article “Channels of Distribution” by Geoff Lancaster the article describes the term ‘distribution system’ as to that of complex of agents, wholesalers and retailers through which manufacturers move products to their intended markets.” Marketing channels are usually made up of independent firms who are in business to make a profit. These are known as marketing intermediaries or middlemen. Distribution outlets can include combinations of owned and independent outlets or arrangements like franchising. The routes marketing organizations take when attempting to ensure that their goods and services reach the intended market or market segments.












In setting up a distribution system, the organization must make a policy choice between selling directly to customers and employing salespeople and using intermediaries i.e. selling through agents, wholesalers and retailers. In the beginning the decision is usually based on various cost factors. Distribution costs in most cases are figured out by using several different factors like the number of potential customers in the market; how concentrated or dispersed they are; how much each will buy in a given period; costs associated with the practical side of the distributive operation (e.g. transport, warehousing and stockholding .If the organization thinks that they have a large enough potential sales market/customers they have a strong case for selling direct and employing a sales force. Organizations that makes industrial goods usually tend to use direct selling and often deliver direct to the user/customer, although in some cases wholesalers or ‘factors’ are used. Organizations that markets consumer goods tend to use a network of marketing intermediaries because of the dispersion and large numbers of potential customers. As with everything there are always exceptions to the rules for example Mary Kay Cosmetics and Avon Cosmetics sell d...