Various Level of Distribution Channels

Various Level of Distribution Channels

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What is Distribution Channel?

Distribution Channel

The distribution channel can be defined as a group of interdependent marketing entities engaged in marketing strategies related to the movement or flow of goods or services from the primary producer to the end customer. Manufacturers, wholesalers, and retailers are among the entities that deliver goods and services to consumers through distribution channels.

AGENTS

WHOLESALERS

RETAILERS

DISTRIBUTORS

Distributors

Distributors, like wholesalers, take ownership of a product, keep it, and then resell it to retailers or other intermediaries for a profit. Distributors, on the other hand, align themselves with complementary products. Coca-Cola wholesalers, for example, won't sell Pepsi products, and vice versa. They can keep closer contact with their suppliers in this way than wholesalers can.

Wholesalers

Wholesalers, unlike agents, own the goods and services for which they act as middlemen. They are a privately held company that owns the things they offer. Wholesalers purchase in bulk and store the items in their warehouses and storage facilities until they are ready to resell. Wholesalers rarely sell to end-users; instead, they sell to other intermediaries, such as retailers, at a higher price than they paid.

Agents

Individuals or businesses that function as extensions of a manufacturing firm are agents or brokers. Their primary responsibility is to represent the manufacturer to the final customer while selling a product. As a result, while they do not directly own the goods, they acquire them during the distribution process. Fees or commissions are how they make their money.

Retailers

A retailer sells goods and services directly to customers for personal or non-commercial purposes. Retailers are businesses that function as a middleman between producers and consumers of goods. Retailers buy goods and services from wholesalers or distributors and resell them to end customers at a profit. They operate as a link between consumers and wholesalers (or manufacturers).

Zero-Level Channel

Manufacturer to Consumer

One-Level Channel

Manufacturer to Retailer to Consumer

Two-Level Channel

Manufacturer to Wholesaler to Retailer to Consumer

Three-Level Channel

Manufacturer to Agent to Wholesaler to Retailer to Consumer

Zero-Level Channel

The products in this channel are sent directly from the manufacturer to the end customer. There is no involvement from any other entity. In this channel, the final consumer must be large enough to buy significant quantities of products directly from the manufacturer, or the producer must have the capacity to deliver goods directly to all end consumers.

One-Level Channel

Between the manufacturer and the customer, the retailer plays an important role. The retailer purchases items directly from manufacturers and distributes them to customers in the amounts required. A retailer must be strong because he must buy in bulk from the producer and sell to many customers in small quantities.

Two-Level Channel

The wholesaler and the retailer are the two intermediaries between the manufacturer and the consumer in this channel. The wholesaler buys large quantities of items from the manufacturer and resells them to the retailer in smaller amounts. Still, there is no direct relationship between the producer and the consumer.

Three-Level Channel

Under this channel, an agent operates as a middleman between the manufacturer and the wholesaler. In most cases, the agent does not buy the items; instead, he arranges for the wholesalers to purchase them from the producer. The wholesaler then sells the goods to the retailer, selling them to the final customer. This structure is used when a manufacturer operates on a massive scale throughout a large geographic area and has a diverse product line.

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