Question

A channel of distribution is the way marketers use to deliver products to consumers; List the 2 major distribution channel options. List the major types of channel members (intermediaries) what can be used in a distribution channel

Answer 1

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Two major distribution channel options are as follows:

1. Direct channel: it is a type of distribution channel under which the product is directly sold to the customer without inclusion of any type of intermediary.

Here, customer care directly approaches to the manufacturer of the product in order to purchase the product. This type of channel is helpful in reduction of cost of selling of good, and is suitable for selling the products with technicality, which requires provision of knowledge to the customer about the product. It can also be used when number of customers or buyers are small. Also, when the per unit cost of the product is large, and product is also bulky on its own.

2. Indirect channel: indirect channel is a type of channel of distribution under which goods are channelized from producers to its customer with the help of some intermediaries included in the channel. In other words, it is a type of channel under which we take help of wholesalers and retailers or other agents who worked for the manufacturer and helps to sell the product and transfer it from the producer to the customer.

Indirect channels can be of three types:

1. One level: it means only one intermediary is included in the channel of distribution for transferring of product from producer to its customer. It can be either the agent or wholesaler.

2. Two level: it means inclusion of intermediaries in between the channel of distribution for transferring of good from the producer to the customer. Usually used to intermediaries are wholesaler and retailer. Manufacturer come into contact with the wholesaler who further sells the product to retailer who finally transfer it to the customer.

3. Multi level or three level: it means inclusion of three or more than three intermediaries in between the channel of distribution. It usually includes wholesaler, retailers and agents.