Notes On Channels Of Distribution:

       A channel of distribution is the route through which the goods pass from the manufacturer or producers to the buyer or the ultimate consumers. It is known as the trade channel.

Defined by William J. Stanton:

       In the opinion of William J. Stanton, "A channel of distribution for a product is the route taken by the title to the goods as they move from producers to the ultimate consumers or industrial users."

Types of Channels of Distribution:

       The flow of goods form the producers to the ultimate consumers may take place through different types of channels of distributions. The most popular channels among them are as follows:

1. Manufacturer to Consumers:

       This is the oldest, simplest and shortest method of distribution of goods. Under this, the manufacturer directly sells goods to the ultimate consumers without any middle man.

       Direct sales have some alternatives. They are

  1. Selling through mail order
  2. Selling through traveling sales man
  3. Selling through multiple shops of the producers

E.g. DCM, Bata, etc.

2. Manufacturer to Retailer to Consumers:

       Between the consumer and the producer, this channel has an intermediary called the Retailer. The wholesaler or agents are totally eliminated. This channel option is preferable when the buyers are large retailers such as departmental stores, super markets, cooperative stores etc. home appliances, readymade garments etc are directly sold to the retailers by the manufacturers.

3. Manufacturer to Wholesaler to Consumers:

       This channel option bypasses the last link retailer. Therefore goods passes from the producers to the wholesaler and the directly to the consumers. It is preferable when the buyers are not individual but institutional buyers such as hospitals, schools and colleges etc.

4. Manufacturer to Wholesaler to Retailer to Consumers:

       It is a conventional and also popular channel of distribution. Under this the producers sell goods in large quantities to the wholesaler who in turn sells to the retailers as per their needs or requirements. The retailers finally sell the goods to the ultimate consumers.

       The system is desirable for groceries, medicines, hardware, food item and other non-durable goods.

5. Manufacturer to Agent to Wholesaler to Retailer to Consumers:

       This is the longest channel of distribution. The difference of this cannel is that here the wholesaler gets the goods from the agent rather than the producer. The agent acts as a sole selling agent of the producer. The marketing task is undertaken by the agent as the entire goods are purchased by him. It is preferable for durable goods like cement etc.

Elimination of Wholesaler:

       Attempts are made by the producers and retailers to eliminate the wholesalers from the field of distribution.

Arguments in Favor of Elimination:

       The following are the reasons in favor of elimination of wholesalers:

  1. The wholesaler makes the goods costlier.
  2. The wholesalers actually do not bear the risk of business when the production is affected.
  3. They encourage black marketing and other unfair means
  4. The relation between the producer and the consumer is hindered
  5. The consumer wants to purchase goods directly from the producers
  6. The services of the wholesaler are not responsible for perishable goods.

Arguments against Elimination:

  1. The wholesalers perform many function of marketing such as assembling, grading, warehousing, transporting etc
  2. The wholesalers brings the goods to the place where they are needed
  3. There are certain type of goods that can be distributed only by the wholesalers
  4. The wholesalers creates demand for the goods more successfully than the retailers

       In a nut shell, it can be concluded that one can think of eliminating the wholesalers, but one cannot think of eliminating their functions or services. These functions have to be performed by someone else if not the wholesalers.