HSC Production Management and Marketing 2nd Paper 6th Chapter Note Channel of Product distribution

HSC Production Management and Marketing 2nd Paper 6th Chapter Note Channel of Product distribution. A distribution channel is a chain of businesses or intermediaries through which a good or service passes until it reaches the end consumer. It can include wholesalers, retailers, distributors and even the internet itself. Channels are broken into direct and indirect forms, with a “direct” channel allowing the consumer to buy the good from the manufacturer, and an “indirect” channel allowing the consumer to buy the good from a wholesaler or retailer.

HSC Production Management and Marketing 2nd Paper 6th Chapter Note Channel of Product distribution

While a distribution channel can sometimes seem endless, there are three main types of channels, all of which include a combination of a producer, wholesaler, retailer, and end consumer. The first channel is the longest in that it includes all four, from producer to the end consumer. The wine and adult beverage industry is a perfect example of this long distribution channel. In this industry, thanks to laws born out of prohibition, a winery cannot sell directly to a retailer. It operates in what is known as the three-tier system, meaning the winery is required by law to first sell its product to a wholesaler, who then sells to a retailer. The retailer, in turn, sells the product to the end consumer.

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