Channel Distribution
272
LESSON-18
CHANNELS OF DISTRIBUTION
Dr Subhanjali Chopra
STRUCTURE
18.0 Introduction
18.1 Objectives
18.2 Meaning of Channels of Distribution
18.3 Kinds of Distribution Channels
18.4 Choice of Channel of Distribution
18.5 Summary
18.6 Glossary
18.7 Self Assessment Questions
18.8 Further Readings
18.0 INTRODUCTION
Distribution of products constitutes an important element of marketing mix of a firm.
After development of the product, the entrepreneur has to decide channels or routes through which the product will flow from the factory to the potential customers. He has a number of alternatives available to him. The entrepreneur may choose to distribute the product directly to customers without using any intermediaries. Alternatively, he may use one or more middlemen including wholesalers, selling agents, and retailers.
Big firms have their zonal or regional authorized agents or dealers spread over the entire country. The dealers, in turn, work with distributors and retailers. On the other hand, small firms cannot afford to have zonal offices, but are devising their own ways of doing business. They also receive regular orders for goods. Entry may be difficult for the small firms. It has been observed that many authorized dealers of known brands also stock other unknown or new brands of goods. They also insist on the customer buying the lesserknown brand because of higher margin of profit. The small entrepreneur, with fewer overheads and low labour costs along with better planning and management, may be able to earn good profits.
18.1 OBJECTIVES
After reading this chapter, you should be able to:
• Explain the meaning of channels of distribution.
• Describe various kinds of distribution channels.
• Enumerate the factors affecting choice of a distribution channel.
• Describe various types of middlemen.
273
18.2 MEANING OF CHANNELS OF DISTRIBUTION
A channel of distribution or trade channel is the path or route along which goods
LESSON-18
CHANNELS OF DISTRIBUTION
Dr Subhanjali Chopra
STRUCTURE
18.0 Introduction
18.1 Objectives
18.2 Meaning of Channels of Distribution
18.3 Kinds of Distribution Channels
18.4 Choice of Channel of Distribution
18.5 Summary
18.6 Glossary
18.7 Self Assessment Questions
18.8 Further Readings
18.0 INTRODUCTION
Distribution of products constitutes an important element of marketing mix of a firm.
After development of the product, the entrepreneur has to decide channels or routes through which the product will flow from the factory to the potential customers. He has a number of alternatives available to him. The entrepreneur may choose to distribute the product directly to customers without using any intermediaries. Alternatively, he may use one or more middlemen including wholesalers, selling agents, and retailers.
Big firms have their zonal or regional authorized agents or dealers spread over the entire country. The dealers, in turn, work with distributors and retailers. On the other hand, small firms cannot afford to have zonal offices, but are devising their own ways of doing business. They also receive regular orders for goods. Entry may be difficult for the small firms. It has been observed that many authorized dealers of known brands also stock other unknown or new brands of goods. They also insist on the customer buying the lesserknown brand because of higher margin of profit. The small entrepreneur, with fewer overheads and low labour costs along with better planning and management, may be able to earn good profits.
18.1 OBJECTIVES
After reading this chapter, you should be able to:
• Explain the meaning of channels of distribution.
• Describe various kinds of distribution channels.
• Enumerate the factors affecting choice of a distribution channel.
• Describe various types of middlemen.
273
18.2 MEANING OF CHANNELS OF DISTRIBUTION
A channel of distribution or trade channel is the path or route along which goods