ii. These agents perform the marketing and distribution functions on behalf of the manufacturers and earns a large margin. It is widely used in the distribution of consumer products like groceries, drugs, cosmetics, etc. In case the intermediary is a distributor, this type of channel is used for specialty products like washing machines, refrigerators or industrial products. Content Guidelines They have more control over cutting out inefficiencies, adding new services and setting prices. ); Direct selling (Amway; Oriflame etc.). Producer Retailer → Consumer…… (One Level/Intermediary) 2. The use of hybrid channel systems has increased greatly in recent years. It was widely used by producers to sell goods and services prior to the advent of industrial revolution and is the one of the oldest method. The company may have targeted big businesses initially, so it set up a team of salespersons to serve and manage these big accounts. In year 2, sales did not increase. The indirect channels of distribution are: (i) Producer-Consumer (industrial goods with high technical content), (ii) Producer-Retailer-Consumer (via large department ‘ stores), (iii) Producer—Wholesaler—Consumer (most industrial products), (iv) Producer-Wholesaler-Retailer-Consumer (most consumer goods). Repair services and management services are examples of such services. It would be prohibitively costly to serve small accounts by using direct sales force. For instance, when IBM began selling directly to customers at low prices through catalogues and telemarketing, many of its retail dealers cried “unfair competition” and threatened to drop the IBM line or to give it less emphasis. The entire production of goods is delivered to the sole agent for further distribution. Direct Channel: 1. The most challenging part of indirect distribution channels is that another party has to be entrusted with the manufacturer's products and customer interaction. Indirect channels of distribution may be classified as follows: 1. (ii) Two-level Channel – Two intermediaries, namely, wholesaler/distributor and retailer and present here. Retailers may be individual shop owners or large retail stores, departmental stores, retail chain stores that purchases goods from the manufacturer and resell it to final consumer. Marketing highly perishable goods like milk, 3. Goods like electrical appliances, fans, radios, ready-made garments and a host of other articles fall in this category. These activities include breaking bulk, making product assortments for delivery to customers, storage and loading. The selection of mode of transport will depend on the type of product, urgency of delivery and the volume being transferred. Co-savings can be achieved by reducing inventory levels, using cheaper forms of transport and shipping in bulk. Manufacturer Agent -> wholesaler -> Retailer -> consumer: This is the longest channel of distribution. This channel is more clarified in the following diagram: Manufacturer → Wholesaler → Retailer → Consumer. This channel of distribution involves two intermediaries to transfer goods from the manufacturer to the customer. The same customers were being solicited by different members of different channels with different types of offers. and control over distribution. “Evidently, the retail trade was viewed as one that cut off small portions from larger lumps of goods.” This .is the direct opposite of wholesale which means handling of the whole rather than of the whole bulk divided into small parts. 6. PreserveArticles.com is a free service that lets you to preserve your original articles for eternity. It involves all activities required in the storing of goods between the time they are produced and the time they are transported to the customer. 3. The expert services of middlemen become available. Indirect channels of distribution may be classified as follows: In this channel, the manufacturer sells goods to consumer through retailers. However, the manufacturer will have to undertake such functions as transportation, warehousing and financing. Under direct channel of distribution, the manufacturer can adopt one of the following methods of selling: It is one of the earliest, easiest and cheapest methods of distribution of goods and known as direct selling. Improve order cycle time – Shorter time between order and delivery, improve consistency between order time and delivery time. In this case, buyers can be directly contacted and goods can be sold by direct personal approach. The new responsibilities, relationships and compensation structures may not looks neat especially if many channels are trying to serve a large pool of diverse customers but need not necessarily be as messy as most hybrid channels are. 4. He wants to pass on the risk of marketing the goods to the selling agents. A firm can design any number of channels. Three-Level Channel 4. Higher the variability in demand from one time period to another, the higher should be the safety inventory for that item. For small quantities the use of rail would be uneconomical. One solution is to separate items into those that arc in high demand and those that are slow moving. Our mission is to liberate knowledge. Hybrid channels have advantages to offer to companies facing large and complex markets. What are Direct Channels of Distribution? Selective distribution is used where the choice of outlet or service offered is specifically relevant to the buying situation. This wide exposure means more opportunities to buy. viii. Credit function – It consists of providing credit to another member of a distribution channel. It may be a retailer or a distributor. iv. Road transportation of goods to and from docks is needed. 4. This channel of distribution thus has one middleman i.e. Producer → Wholesaler → Retailer → Consumer (Two Level/Intermediaries), 3. Hence also called Two Level Channel/PWRC. i. Perishable products, physically or fashion wise, in order to speed up their distribution. 4. ii. They may, however, not only sell their own products to the retailers but may also make large-scale purchases from other manufacturers to meet the demand of the retail traders. This is the simplest and shortest channel in which no middlemen is involved and producers directly sell their products to the consumers. But it is important to ask these questions each time the company decides to add another channel because each time a channel is added the existing relationships, responsibilities, and compensation structure among various channel members are altered. (iv) Four-level Channel – Four intermediaries, namely, agent, distributor, wholesaler and retailer are present here. Each wholesaler distributes the product among a number of retailers who finally sell it to the ultimate consumers. Producer → Retailer → Consumer ……. As the markets for the product grew, the company decided to appoint independent distributors to stock and sell its products. It is important to realise the effect of the indirect nature of the channel, and the supply pipe line, on these indirect channels.

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