• Provides the product where and when the customers want to buy
  • Where the product is sold largely influences how will it will sell- it could lead to the product failing altogether or losing sales
  • It must be easy for the customers to buy the products

Channels of Distribution

  • The means by which a product is passed from the place of production to the customer or retailer
  • Each channel includes the same activities: buying, selling, promotion, storage and transportation
  • This could be via intermediaries or directly

Channel of Distribution 1:

  • Manufacturers sell their products directly to the consumer
  • This is a direct and personal way of selling often used when selling directly from one manufacturer to another
  • E.g. car parts, agricultural goods, factory outlets

Channel of Distribution 2:

  • Producer sells directly to the retail outlets (retailers) who then sell it to the consumer
  • E.g. Jewelry, furniture, supermarket

Channel of Distribution 3:

  • Manufacturer sells to wholesalers in large quantities and the wholesaler divides the stock into smaller portions for the retailers to buy
  • Retailers cannot buy very large quantities due to lack of space and short shelf-life of products, so wholesalers buy it for them.
  • E.g. food items
Advantages of a WholesalerDisadvantages of a Wholesaler
Breaking bulkMay be more expensive for the small store to buy from a wholesaler
Reduces storage space needed by the manufacturer; therefore reducing storage costsMay not have full range of products to sell (less choice)
Fewer transactions, deliveries and administration required; therefore reducing costTakes longer for fresh produce to reach the shops; therefore quality may fall
Faster method of sellingWholesaler may be a long way from the small shops
Gives credit to small retailers
May deliver to small retailers; reducing transportation costs
Promotion carried out by wholesaler instead of manufacturer
Wholesaler can give advice to the manufacturer and small retailers as to what is selling well

Channel of Distribution 4 [Export Goods]:

  • When products are exported, manufacturers may use an agent in another country who sells on behalf of the manufacturer.
  • Agents are independent people or businesses that are appointed to deal with the sales and distribution of a large range of products. The agent will either put an additional amount on the price to cover expenses or will receive commission on sales.
  • This gives the manufacturer some control over the way the product is sold
  • Agents are aware of local conditions and will be in the best place to select the most effective places to sell
  • Manufacturer to agent to wholesaler to retailer to consumer
  • This is usually done in international markets only when dealing with exports

Channel of Distribution 5 [Online]:

  • The use of the internet and electronic communications to carry out business transactions
  • Manufacturers can directly sell to consumers (channel 1) or retailers can sell to consumers (channel 2)
  • This gives room for communication between the buyer and the seller as well as an opportunity for promotion and advertisement
  • Agents are often involved if the sale is international
  • This channel was created and has succeeded due to globalization
Advantages of E-CommerceDisadvantages of E-Commerce
Fast and effectiveLack of trust
24-hour sellingLanguage barrier
Convenient for the customerLack of access to the technology
Low cost to set up and operateCustomers may not be aware of the website
International markets easily open
Communication is direct and easy

Selecting Channel of Distribution to Use

  • Type of product
  • How often product is sold
  • Technicality / level of technical knowledge required
  • Price
  • Image
  • Lifespan/ perishability
  • Consumer/Market location
  • Competitor location- always be close to your competition

Methods of Distribution/Selling

Independent RetailersSole trader organizations
Department StoresLarge store selling a variety of products and buying from a variety of producers
Chain StoresTwo or more stores with same name/characteristics
Discount StoresRetail stores offering a wide range of products at a discount price. These are often similar products.
SuperstoreLarge out-of-town stores with a wide range of products
SupermarketsRetail grocery stores
Direct SalesDirectly from the manufacturer to the consumer
Mail OrderAdvert seen in a catalogue/magazine and ordered online, via post/telephone
Internet/E-CommerceView goods on business website and order online/via telephone/via post

Method of Transportation

  • Varies depending on the product being delivered and value of the product
  • It must be efficient, cost-effective and on-time
  • The product must arrive on time and in good condition
Road HaulageCheapFast

No rail tracks needed

Free advertising



Cost of lease/ loan repayment/ insuranceMay be cheaper to hire a specialist transport business to transport products if the lorries are not often in use

More expensive than railways


Lorries Vans
RailwaysSuitable for long-distanceCheaper than road transport

Faster than road over a direct route

Cannot deliver to final delivery pointLimited to railway tracksTrains Metro
Canal/ RiverSuitable for national deliveriesCheap

Suitable for large, heavy products which would be more expensive to transport via rail/road

River/Canal must be available and going to where the business needs to deliver its productsBoats
Sea FreightSuitable for international tradeVery quick

Cheap to unload and reload the ships

International waters must be availableInternational water laws applyShipsContainers
Air FreightSuitable for small, expensive or perishable goodsVery quickExpensiveAirplanes
PipelinesSuitable to transport liquids or gas over a long distanceCheaper than tankers/docks

Direct route

ExpensiveLaws apply

Technical know-how required



River/CanalSea FreightRoad/RailAir Freight

Marketing Plan

  • A marketing plan is a business document written for the purpose of describing the current market position of a business and its marketing strategy for the period covered by the marketing plan (usually 1-5 years)
  • The purpose of a marketing plan is to clearly show what steps or actions will be taken to achieve the plan goals.
  • It is a combination of all four P’s
What to Include


Target audience

(may include labelled drawing of product)

PricePricing strategy
PromotionAdvertising methodsAdvertising media



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