Distribution (Edexcel A Level Business)

Types of Distribution Channels

• Distribution channels refer to the various intermediaries through which goods/services move from the manufacturer to the end customer 

The three different types of distribution channels businesses can use to move products from the manufacturer to the end consumer

Four Stage Distribution Channel

• A traditional channel consists of four stages: producer, wholesaler, retailer, and consumer

• This channel is commonly used for products such as groceries, clothing, and electronics

  • E.g. The Coca-Cola Company produces the soft drink and then sells it to a wholesaler, who in turn sells it to a retailer

  • The retailer then sells the soft drink to the end customer

Three Stage Distribution Channel

• The three stage distribution channel eliminates the wholesaler stage, with the producer selling directly to the retailer

• This channel is often used for products with high demand or where the cost of distribution is high

• This channel is often used for products with high profit margins, where the manufacturer can afford to sell directly to the retailer and still make a profit

  • Eg Toshiba produces laptops and sells them directly to retailers like Currys, who then sell them to the end customer 

Two Stage Distribution Channel

• The two stage distribution channel eliminates both the wholesaler and retailer stages, with the manufacturer selling directly to the end consumer

• This channel is commonly used for products that are sold online or through direct sales channels

  • E.g. RyanAir sells its service (passenger tickets) directly to the end customer on their website 

Changes in Distribution to Reflect Social Trends

• Changes in distribution have been impacted by social trends such as the growth of e-commerce and the shift from product-based businesses to service-based businesses

• By understanding these trends, businesses can adjust their distribution strategies to better meet the needs of their customers and stay competitive in the marketplace

 The Growth of E-commerce

 The Shift from Product-based Businesses to Service-based Businesses