Part 5 Place Dynamics
322
Channels of
Distribution
A major part of the place decision is
selecting the channel of distribution. A
channel of distribution is the route a good
takes from its original source to its final
customer. Think of an apple you ate recently,
26-6. What route did the apple take to get
to you? The apple started out in an apple
orchard owned by an apple farmer. The
apple farmer sold the apples to an apple
buyer. The apple buyer buys apples from all
the farmers in the area. The apple buyer then
sells apples to your local grocery store. You
then go to the grocery store and buy
the apple.
You could have bought the apple directly
from the apple farmer. However, you live
very far away from any apple farms. The
apple buyer and the grocery store make
the apple convenient to you. The apple
orchard, apple buyer, and the grocery store
are the channel of distribution for the apple.
Wholesalers and Retailers
The businesses between the original
source (the apple farmer) and the customer
(you) are called intermediaries. The
apple buyer and the grocery store are
intermediaries. (Intermediaries used to
be called middlemen; they are the people
or businesses in the middle between the
source of the product and the customer.)
Intermediaries are also called resellers
because they resell products that they have
purchased to another intermediary or to the
final consumer.
The two most common types of
intermediaries are wholesalers and retailers.
A wholesaler is a business that buys
products from a producer, and then sells
them to another business. Wholesalers are
B2B businesses. Wholesalers are also called
distributors. As you learned in Chapter 25,
a retailer is a business that buys products
from a producer or a wholesaler, and then
sells the product to the final customer in
the consumer market. Retailers are B2C
businesses. Retailers include department
stores, supermarkets, convenience stores,
restaurants, movie theaters, car dealers, and
many other types of stores. Figure 26-7
shows the most common channel of
distribution for consumer goods.
A channel member is a specific business
that is part of the channel of distribution
for a specific product. In the apple example,
Roberto’s Apple Orchard, Tamar’s Apple
26-6
Think of an apple or other fruit or vegetable that
you ate recently. How did it get to you from the
place where it was growing?