Explanation should include defining channels of distribution as the path a product takes from producer to consumer. Channel members include intermediaries, wholesalers, rack jobbers, drop shippers, retailers (brick-and-mortar and online), and agents. Direct distribution takes place when the producer distributes directly to consumer; indirect distribution involves one or more intermediaries.
The channel is determined by the type of product (physical vs. virtual product; service companies; vending).
Process/Skill Questions:
- How is a distribution plan like a blueprint?
- What problems can occur if product distribution breaks down?
- What factors should an entrepreneur consider when selecting vendors and suppliers?
- How can an entrepreneur decide how many vendors to use?
- How can an unreliable vendor affect an entrepreneur's business, sales, or customer relationships?
- How might the size and/or structure of a business affect the buyer-vendor relationship?
- How might treating vendors kindly benefit a business?
- What is the function of intermediaries?
- Why is it important that all aspects of distribution work together?
- How does a business determine the most advantageous method of distribution?
- What external factors might affect the channels of distribution?
- How can a company streamline the shipping process?