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.
-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
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.
. 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
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
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