There are a number of channels
of distribution available to the producer, which may
be employed by him to bring his products to the
market. Consumer goods may be distributed generally
through channels, in each of which the manufacturers
may use the sales branch or sales office as the
additional alternative. One of the channels used is
Producer-Consumer, where no middleman is involved.
Sales are made from house to house or by direct
mail.
A second channel is
Producer-Retailer-Consumer, by which goods may be
purchased directly from manufacturers. Retail stores
may also be opened by manufacturers by this channel.
A third channel is
Producer-Wholesaler-Retailer-Consumer, which is the
traditional and most economical channel.
Penultimately, there is
Producer-Agent-Retailer-Consumer, in which many
producers use manufacturing agents, brokers, etc.
for reaching the retail market. Finally, there is
Producer-Agent-Wholesaler-Retailer-Consumer, where
the services of agents are utilized by the smaller
retailers, who purchase from a wholesaler and sell
to small stores.
A large number of channels of
distribution are available to the manufacturer for
bringing his product to the ultimate consumer.
Efficient distribution at the least cost and
attaining the desired volume of sale can be secured
only after experience, study and analysis. The
notice of the product, its unit value, its technical
features, and its degree of differentiation from
competitive products are the factors which may limit
the number of potential channel alternatives.
A retailer, as the name
indicates, does retailing, which is to say he sells
to ultimate consumers. In the distributional
hierarchy, retailers are below the level of
stockists, distributors, and wholesalers. Sometimes,
retailers are termed dealers or authorized
representatives. The retailer often operates in a
smaller territory or at his specific location; earns
lesser commission compared to higher levels in the
channel; he does not carry out stock holding and
sub-distribution functions.
A stockist or distributor or
wholesaler is also a large sized operator but not on
par with the marketer or sole selling agent in
level, size and territory of operation. Stock
holding and sub-distribution, as per the policies
laid down by the manufacturers or the marketers, are
the main functions of stockists/distributors.
