Question

Case Study 3 ( 10 Marks)

Mr. Talal is working in a manufacturing company for shoes and bags lines. They produce high quality products for reasonable prices that can be afforded by all customers income level. Talal knows that taking care of production is not the only thing matters in the company, but other things like storing,selling,packging and distribution of these products is also important.

A manufacturer can sell his products through many channels like wholesalers and retailers. If the company did not choose the channels carefully, it might become a problem for the company and all their production efforts will go waste. Transferring the product from their manufacturers and stores to ultimate customers is really important. So Talal chose the shortest channel to deliver their products and the most suitable for them, which is selling directly to retailers. Also, deciding to whom should the product be sold and what should be sold to them is an important question to be asked before even choosing the distribution channel. Because every company has limited resources and it is important to

choose the right part of the market to serve.

Talal’s company is thinking of expanding overseas therefore selling directly to retailers or customers will be difficult.Talal has to choose other ways to sell their products like using middlemen to to distribute

the products.

Question 3

i. Do you think middlemen can help Mr. Talaal in distributing the products overseas? Debate

. (5 marks, 125-150 words)

ii. Suggest other types of distribution channels that can be choosen to distribute products of Talal’s company? (5 marks, 125-150 words)

Answer 1

1). There are two types of distribution channel i.e. direct and indirect. Both types of channel are suitable at there own level according to the type of product of manufacturer. Middleman are one level channel of indirect channel and are suitable for the products like automibiles who sell their products with the help of a dealer.

In this case of shoes and bags line, middleman is not coparetively suitable. these types of products need a person who make window shopping available like retailer and wholeseller to transfer goods from manufacterer to customer. this method of distribution called two lewel channel. This level helps manufacturer to cover the large area of market. It is most adopted level of distribution for customer products, which products need customers choice to choose product. this type of level need high advertising power to make customers known about the product. Although this level needs more investments and cost compared to the middleman.

2). As above mentioned there are two types of distribution channel that are following;

a) direct method

according to this method manufacturer directly intract with customer and sells their product. It is the shortest and simplest method of distribution. it is also called zero level channel of distribution as it does not involve any intermediary. It helps to make direct relation with customer for better understanding of need of customer

example: E-bussiness, direct mail orders, direct selling like oriflame products

b). indirect method :

when a manufacturer employs one or more intermediaries to distribute their product to the customer. In this, goods move from the point of production to the point of consumption through intermediares. this includes:

(1) one level distribution

this channel of distribution involes one intermediary to transfer goods from one place to another. This includes middleman for transfering goods and there is also transfer od risk from manufacturer to middleman. This enables manufacturer to retain control over middleman and tek look over his activities over a period of time.

example: automobiles industries

(2) two level distribution  

this channel of distribution involes two intermediaries to transfer goods from manufacturer to customer, wholeseller and retailer act as connection between manufacturer to customer. This helps manufacturer to cover large market areas in small time period. it is most suitable and mostly adopted method of distribution

(3) three level distribution

    this channel of distribution involves manufacturer to get the help of broker or an agent to connect with best retailer and wholeseller. this helps manufacturer to spread their product over wide geographical areas with more efficient selling skills