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Business Administration
BUSN 1101
William Shimer

9.4 Placing a Product Distribution: all activities involved in getting the right quantity of your product to your customers at the right time at a reasonable cost. Distribution Channels -Directly to customer -Intermediary—a wholesaler or retailer who helps move products from their original source to the end user. Selling Directly to Customers Mostly small start up sell directly to customers. Many business-to-business sales take place through direct contact between producer and buyer. The Internet has greatly expanded the number of companies using direct distribution, either as their only distribution channel or as an additional means of selling. Advantage Disadvantage . Selling direct to the customer is a certain . You must commit your own resources to degree of control over prices and selling the selling process, and that strategy isn’t activities appropriate for all businesses. . You don’t have to depend on or pay an intermediary. Selling through Retailers Retailers buy goods from producers and sell them to consumers, whether in stores, by phone, through direct mailings, or over the Internet. Selling through retailers means giving up some control over pricing and promotion. The wholesale price you get from a retailer, who has to have room to mark up a retail price, is substantially lower than you’d get if you sold directly to consumers. Selling through Wholesalers Selling through retailers works fine if you’re dealing with only a few stores (or chains). But what if you produce a product that you need to sell through thousands of Wholesalers (sometimes called distributors): intermediaries who buy goods from suppliers and sell them to businesses that will either resell or use them. The wholesaler doesn’t provide this service for free, which decreases your profit margin. While selling through wholesalers will cut into your profit margins, the practice has several advantages. For one thing, wholesalers make it their business to find the best outlets for the goods in which they specialize. They’re often equipped to warehouse goods for suppliers and to transport them from the suppliers’ plants to the point of final sale. Finally, intermediaries, such as wholesalers, can make the distribution channel more cost-effective. Physical distribution—the process of getting products from producers to customers— entails several interrelated activities: warehousing in either a storage warehouse or a distribution center, materials handling (physically moving products or
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