Accounting technicians scheme west africa
C.9.2 Channels of distribution
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- C.9.3 Factors influencing Choice of Distribution channel
| C.9.2 Channels of distribution A channel of distribution is the route through which goods move from the producer to the consumer. There are three main channels of distribution. These areas follows Channel 1: Producer Customer Channel 2: Producer Retailer Customer Channel 3 : Producer Wholesaler Retailer Customer Channel 4 : Producer Agent Wholesaler Retailer Customer In channel ‘1’ the producer sells directly to the consumer. Small scale producers and producers of services fall under this category. In channel ‘2’ the wholesaler is bypassed and the producer deals directly with the retailer often large-scale retailers with several branches. These retailers at times perform the functions of wholesalers in addition to their retailing functions. In channel 3, the wholesaler buys in bulk from the producer and stores the goods for resale to retailers. It is used by dealers in consumer goods and services. In channel 4, goods move from manufacture to agent to wholesalers to retailers to consumers. It is the longest indirect channel option that a company has. C.9.3 Factors influencing Choice of Distribution channel Producers take several factors into consideration before choosing the above-mentioned channels. These factors areas follows a) Nature of the market This refers to the type of market the organisation’s products) is intended for, i.e. consumer market or industrial market. Producers traditionally use middlemen when dealing with the consumer market but sell directly to the customer in the industrial market. bi Location of customers Producers sell directly to their customers when the latter is concentrated geographically in one area but use middlemen when their customers are dispersed and difficult to reach. c) Physical features of the product: Physical features as used here refer to the extent of the products perishability and bulkiness. Perishable products are sold directly to the final consumer. Furthermore, bulky products are sold directly to customers. Most sand and stone contractors sell the products directly to the users. d) Complexity of the products Complex products such as computers, telecommunication equipment and some factory plants may require installation by highly skilled engineers 253 and/or technicians who are also expected to provide after-sales service after the purchase of the product. Manufacturers also employ dealers or agents who have the facilities to service the equipment bought. e) Financial resources of the producer: The size of the organisation and its financial resources often influence the way it distributes its products. Big organisations with large financial resources often employ their own sales force warehouse their products and transport goods direct to customers. Download 3.37 Mb. Share with your friends:
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