2. Who takes part in distribution channels?

Distribution (or placement) is one of the four aspects of marketing. A distributor is the middleman between the manufacturer and retailer. After a product is manufactured it may be warehoused or shipped to the next echelon in the supply chain, typically either a distributor, retailer or consumer.

A number of alternate 'channels' of distribution may be available:

· Selling direct, such as via mail order, Internet and telephone sales

· Agent, who typically sells direct on behalf of the producer

· Distributor (also called wholesaler), who sells to retailers

· Retailer (also called dealer or reseller), who sells to end customers

· Advertisement typically used for consumer goods

Distribution channels can thus have a number of levels. Kotler defined the simplest level, that of direct contact with no intermediaries involved, as the 'zero-level' channel.

The next level, the 'one-level' channel, features just one intermediary between producer and customer - a retailer. In small markets (such as small countries) it is practical to reach the whole market using just one- and zero-level channels. In large markets (such as larger countries) a second level, a wholesaler for example, is now mainly used to extend distribution to the large number of small, neighborhood retailers.

3. Why do some companies make luxury products abroad rather than at home? Give examples.

Some companies prefer to make luxury products abroad rather than at home because they want to lower the firm costs. The process of subcontracting to a third-party company is named outsourcing.The reasons for outsourcing are many and varied, such as cost saving, cost restructuring, improving quality, knowledge and many others. The classical examples of companies making their products abroad are Coach, the US leather goods maker, which outsources all its products to Asia, and Burberry, which also has many Asian licensing arrangements.