Question

A channel can be zero-based when targeted at one segment and not zero-based when when targeted at another segment. True or false? Explain your answer.

Answer 1

It is true.

Zero-based channel is the type of channel in which the producer directly supplies the product to the consumers. In case of non zero-based channel the producer doesn't sell directly to the consumer. He sells it to middlemen (retailers or wholesalers) who then sell it to customers.

Consider the case of perishable goods like milk. Assume that producer of the milk doesn't have a refrigerator. So he cannot store the milk for long durations. So he needs sell his product at a faster rate. Therefore, he cannot sell his product to retailers as it will take longer time. He directly sells it to customers.

Similarly, consider the case of plastic spoons. These are not perishable. Here we can think that we can sell our product directly to customer but there will be many problems. He will have to maintain inventories of goods at many locations to assure timely delivery to the customers. He will have to train many sales staff. To overcome these problems, it is better for him to follow non zero-based channel and sell his products to retailers or wholesalers.