1. End Users and Intermediaries in a Distribution Channel
2. Market Research and End User Feedback
3. The Distribution Chain
4. Influence of the Distribution Chain on Final Prices

Final consumer definition is the description of the characteristics of an end user of a finished product or service. It helps to carry out a promotional (or marketing) strategy that works by first studying and understanding the needs (or pain points) of the end user of a finished product or service.

End Users and Intermediaries in a Distribution Channel

An end user or final consumer is the final point in a distribution chain. A distribution chain (or channel) is an expression that describes the sets of actions that make up the various stages of getting a finished product or service to a final consumer. The end user can be a person or a corporate entity that uses the finished product or service. An end user is distinct from other intermediaries involved in the distribution channel because an end user buys the finished product or service for personal use.

Unlike intermediaries, end users don't buy a product or service and sell it on to someone else for profit, which is why they're referred to as final consumers. Some examples of end users are as follows:

  • A steel company using up iron ore to manufacture steel
  • Engineers using tools made of steel
  • People using engines manufactured with steel parts by the use of steel tools

In the above examples, the steel and the products made of it are final products. Therefore, the steel company, the engineers, and the engine users are final consumers.

For another illustration, let's say Cindy buys a can of baby food for her 9-month old baby. Cindy doesn't eat the food herself. Instead, her baby eats it. In that case, Cindy isn't the final consumer. She's just the purchasing agent, while her baby is the final consumer.

Market Research and End User Feedback

Marketing executives ought to know who the final consumers of their products are. A thorough knowledge of the end consumers is important because they're the ones who keep the manufacturers and marketers in business. In terms of marketing, customers and final consumers alike make up a “decision-making unit” (DMU). A DMU can comprise from a few people to thousands of people.

Stakeholders in the DMU can have different purchase objectives. For instance, a mother who buys a new pair of shoes for her child may be concerned with the cost and durability, while her child (the end user) may be concerned with a trending brand and fashionable looks. Several factors influence the responses of the end users to products and services.

Many of such factors are objective. For instance, the response of end users can be influenced by whether a product or service fixes a problem or performs satisfactorily or not. Other factors are subjective and are based on social and psychological influences. Manufacturers may be unaware of these factors. Therefore, market research and user feedback are required for a proper consumer insight.

The Distribution Chain

There are various stages of progressively getting the finished product or service to the end user from the manufacturer. In some instances, the manufacturer can reach the end user directly. The distribution chain can either be a long series of related events with complicated details or a short and simple event.

An instance of a manufacturer directly reaching an end user is the case of a customer who goes to eat in a restaurant. In contrast, if a grocery store orders a supply of ready-made cookies from a restaurant to sell to end users, the grocery store serves as a go-between for the restaurant and the final consumer.

In some cases, the distribution chain is much longer. For example, a farmer sells large quantities of corn to wholesalers who sell the corn to resellers, and the resellers sell them to retailers who finally sell them to consumers. Everyone after the manufacturer and before the consumer is an intermediary.

Influence of the Distribution Chain on Final Prices

The length of the distribution chain goes a long way to determine the final price of the product because each intermediary involved in the distribution of the product adds their profit to its selling price as they sell it on to the next distributor until it gets to the consumer.

An instance of the length of the distribution chain affecting the final price of a product is when a farmer directly sells his corn in a market to consumers instead of selling it to wholesalers. In doing so, the farmer will greatly cut down the final cost of the product by removing the middlemen from the picture and shortening the distribution chain.

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