The term "Channel of Distribution" in Business Studies tends to refer to how the product will actually be sold.

 

Typically there are two different channels of distribution that are used by business;

 

  • Business to Business (B2B)
  • Business to Consumer (B2C)

 

Business to Business (B2B) is when a business will sell its products to another business. This is typically the most common type of distribution as it involves selling a large volume of products, at a lower price than the final retail price that the customer will pay.

 

For example: Coke Cola selling cans to Asda would be an example of Business to Business (B2B). Asda is the the customer who will by large quantities of drink for a lower unit cost than what the product will be sold on to the customer for.

 

Business to Consumer (B2C) is when a business will sell its products direct to the customer. This will typically happen using the internet as this enables the manufacturer the chance to sell direct to the final customer without the need for a shop, which typically can be expensive. They will be selling in smaller volumes of product, however each item will now be at a higher price, meaning increased profits.

 

For example; Asda selling the Coke Cola in the store is an example of Business to Consumer (B2C). The can of Coke will now be more expensive than the price that Asda bought the Coke for, however this difference in price will be the profit that they make on each can sold.