Distribution channel diagram

Three-Level Channel Manufacturer to Agent to Wholesaler to Retailer to Customer : Three level channel of distribution involves an agent besides the wholesaler and retailer who assists in selling goods.

importance of distribution channels

Retailers will procure the goods from wholesaler or distributors and sell it to the final consumers. You can also follow tutor2uBusiness on Twitter, subscribe to our YouTube channelor join our popular Facebook Groups.

Three level channel of distribution

If the customer belongs to the consumer market, longer channels may be used whereas shorter channels are used if he belongs to the industrial market. If the unit value is high like in the case of jewellery, direct or short channels are used, whereas products like detergents whose unit value is low use longer channels of distribution. Access detailed step-by-step plans in our new marketing website. Pricing conflict is common, and it can jeopardize your entire strategy, so do your best to map out the price at each step and develop the best solution possible. You may also use an inbound telemarketing group or a field sales team. The agents can be categorised into super stockists and carrying and forwarding agents. A reverse channel may go from consumer to intermediary to beneficiary.

As a result, the complexity of all transactions may be quite overwhelming. A producer of household goods, for example, like laundry detergent could just as easily sell their goods in Europe as in the United States.

Fourth, there are instances when the best channel arrangement is direct, from the producer to the ultimate user. They store and warehouse huge quantities of the products and sell them to other intermediaries in smaller quantities for a profit.

One level channel of distribution works best for manufacturers dealing in shopping goods like clothes, shoes, furniture, toys, etc. Identify natural partners If you want to grow beyond the direct model, look for companies that have relationships with your end-users. This one goes in the reverse direction and may go — from consumer to intermediary to beneficiary.

Maruti Suzuki Corporation sells its cars through more than dealer outlets in India and abroad.

3 level channel of distribution example

What are the risks if an intermediary sells the product to an inappropriate customer? All the above mentioned functions should be considered logically in any market. Here, the wholesaler after purchasing the material in large quantity from the manufacturer sells it in small quantity to the retailer.

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Lecture 4 distribution channels