Part 5 Place Dynamics
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intermediaries is called direct distribution.
Many services have direct distribution. As
you learned in Chapter 21, the production of
a service is not separable from the use of the
service. A manicure is not produced until
the manicurist actually files and polishes the
nails of a customer. A haircut does not exist
until the hairdresser cuts your hair. These are
examples of direct distribution. The service
product is purchased directly from the
service producer, 26-10.
Most goods have distribution channels
with one or more intermediaries. A channel
of distribution that uses one or more inter­
mediaries is called indirect distribution.
Goods are sold to companies in the next seg­
ment of the channel. The step above the
transaction is the seller. The step below the
transaction is the buyer. Figures 26-7,
26-8, and 26-9 are examples of indirect
distribution.
Choosing the best channel of distribution
for a product is critical to the success of the
product. A producer might have the best
product in the world, but poor distribution
decisions can cause the product to fail.
Intermediaries provide important services
to producers. Intermediaries specialize in
distribution. As you learned in Chapter 1,
distribution is the process of delivering products
to customers. Distribution includes shipping,
storing, inventory, and stocking. Distribution
is a major part of the place P of the marketing
mix.
Intermediaries are experts at making sure
goods are in the right place, at the right time.
The producers are experts at producing large
quantities of their products. The apple farmer
is expert at producing bushels of apples.
The basketball factory is expert at producing
truckloads of basketballs. The producers
often do not have the expertise to do a good
job at distribution. Since intermediaries
specialize, they can often perform the
movement of goods more economically than
the producer can.
Three major functions of intermediaries
include (1) facilitating exchanges, (2) break-
bulk service, and (3) some of the Four P
marketing activities. Intermediaries also
handle physical distribution, which will be
covered in Chapter 27, and retail inventory,
which will be covered in Chapter 28.
Facilitating Exchanges
One of the major services of
intermediaries is facilitating exchanges.
Facilitate means to make an action easier.
Intermediaries make the exchange process
easier. Intermediaries facilitate exchanges
for both consumers and for producers. The
following are simplified examples of how
intermediaries facilitate exchanges. These
examples may seem too simple; however,
they clearly show one of the basic functions
that intermediaries perform for most of the
consumer goods you buy.
26-10
Most services have direct distribution. You buy
the service, such as auto repair, directly from the
person who performs the auto repair.