Question

Write Short Note on Channels of Distribution

Answer 1

1. Direct Channels: When the producer or the manufacturer directly sell the goods to the customers without involving any middlemen, it is known as a direct channel. It is the simplest and the shortest mode of distribution. Selling through Indian Post, Internet or door to door selling, etc. are the examples of this channel.
Methods of Direct Channel are :
(a) Door to door selling
(b) Internet selling
(c) Mail order selling
(d) Company-owned retail outlets
(e) Telemarketing 

2. Indirect Channels: When a manufacturer or a producer employs one or more middlemen to distribute goods, it is known as an indirect channel.
Following are the main forms of indirect channels :

(a) Manufacturer-Retailer-consumer: This channel involves the use of one middleman i.e. retailer who in turn sells them to the ultimate customers. It is usually adopted for specialty goods. For example, Tata sells its cars through company approved retailers. 

(b) Manufacturer-Wholesaler-Retailer-Customer: Under this channel, wholesaler and retailer act as a link between the manufacturer and the customer. This is the most commonly used channel for distributing goods like soap, rice, wheat, clothes, etc.

(c) Manufacturer-Agent-Wholesaler-Retailer-Consumer: This level comprises of three levels; middlemen (agent), wholesaler and retailer. The manufacturers supply the goods to their agents who in tum supply them to wholesalers and retailers. This level is usually used when a manufacturer deals in limited products and even then wants to cover a wide market.