Question

discuss how channel members influence producers’ prices and explain why producers’/manufacturers’ do not normally control prices of their products.

Answer 1

Channel members are the people in the supply chain which help the producer of the products to distribute the products in the market. They render their distribution services to the producers. In lieu of their services they add a portion of their profit in the total price of the product. If their are higher number of channel members included in the supply chain higher profit margin will be kept by them in the total price. In other words, as the number of channel members increases in the supply chain the price of the product keeps on increasing.

The producer of the commodity which initiates the supply chain fix the basic price of the product but at what price that product will be sold in the market depends upon the number of channel members in the supply chain. Thus, it can be concluded that it is the channel members of the supply chain who decide the price of the product and not the producer of that product.