Wholesaler Importance

Topics: Marketing, Marketing plan, Marketing management Pages: 3 (708 words) Published: June 1, 2009
The Nature of Distribution Channels
Most businesses use third parties or intermediaries to bring their products to market. They try to forge a "distribution channel" which can be defined as "all the organisations through which a product must pass between its point of production and consumption" Why does a business give the job of selling its products to intermediaries? After all, using intermediaries means giving up some control over how products are sold and who they are sold to. The answer lies in efficiency of distribution costs. Intermediaries are specialists in selling. They have the contacts, experience and scale of operation which means that greater sales can be achieved than if the producing business tried run a sales operation itself. Functions of a Distribution Channel

The main function of a distribution channel is to provide a link between production and consumption. Organisations that form any particular distribution channel perform many key functions: Information

Gathering and distributing market research and intelligence - important for marketing planning Promotion
Developing and spreading communications about offers
Finding and communicating with prospective buyers
Adjusting the offer to fit a buyer's needs, including grading, assembling and packaging Negotiation
Reaching agreement on price and other terms of the offer
Physical distribution
Transporting and storing goods
Acquiring and using funds to cover the costs of the distribution channel Risk taking
Assuming some commercial risks by operating the channel (e.g. holding stock) All of the above functions need to be undertaken in any market. The question is - who performs them and how many levels there need to be in the distribution channel in order to make it cost effective. Numbers of Distribution Channel Levels

Each layer of marketing intermediaries that performs some work in bringing the product to its final buyer is a "channel level". The figure...
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