Entrepreneurship and Small Business (ESB) Certification Practice Exam

In what way do distributors typically operate?

1. They sell products from their own manufacturing

2. They use their sales force to promote another company's products

3. They only distribute promotional materials

4. They directly contact end customers

The correct answer is: They use their sales force to promote another company's products

Distributors primarily act as intermediaries in the supply chain, focusing on the distribution of products rather than producing them. They typically do not manufacture products themselves; instead, they purchase goods from manufacturers and then sell those products to retailers or directly to other businesses. A key part of their role involves using their own sales force to promote and sell the products of the companies they represent. This promotional effort is crucial as it helps to increase awareness and drive demand for the products within their target markets. While distributors do handle products, they are not engaged in manufacturing, so the option that suggests they sell products from their own manufacturing is not accurate. Distributors may provide promotional materials, but their core function goes beyond just distributing these materials; they are involved in the broader sales and marketing efforts. Lastly, distributors typically do not directly contact end customers as their main responsibility is to serve as a link between manufacturers and retailers or other businesses. Thus, the correct understanding of a distributor's role confirms that they leverage their sales force to promote another company's products effectively.