They may be used as a key customer choice criterion. This distribution channel enables manufacturers to retain control and approach large number of potential customers. Definition and Importance of GVA. Bulk breaking function – This consists of buying products in relatively large quantity and selling in smaller quantities. It is an impersonal selling, branding, grading, standardising, packaging etc., facilitating the growth of this system. Recently, with the proliferation of customer segments and channel possibilities, several companies have adopted multi-channel distribution systems, it is often called hybrid marketing channels. Two Level Channel – (Producer-Wholesaler-Retailer-Customer): This is the most common and traditional channel of distribution. Dealers may not have knowledge of the goods or they require a good margin of profit or they do not want to stock unknown products; for them this system is good. Which channel gets compensated for which customers and for what tasks? It is typified by con­fectionery, soft drinks and other FMCGs (fast-moving consumer goods). telemarketer would not mind sharing a part of his commission because he understands that if it were not for the salesperson’s help, the smaller Account would not have been converted. Visit us to find here free business notes of all the subjects of B.com, M.com, BBA & MBA online. It means distribution of national product among various factors of production according to the share of contribution to the output. 5000 crore gets landlords as rent then such a distribution will be termed as macro distribution. 15,000 crore in terms of interest, entrepreneur Rs. 1. The agents may be sole selling agents who have a wide distribution network, wide network of sales person, wholesaler and retailer. Water transportation – is slow but inexpensive. The word ‘retailer’ is an adaptation of ‘retailer’, a French word which means ‘to cut’. It is related to the size and not source of the income of the individuals. From this description, it will appear that a wholesaler does not produce or manufacture commodities or goods himself but works only as a trader engaged only in buying and selling activities. Some customers’ value consistency in delivery time rather than speed (guaranteed delivery within 5 days each time. Which channel is supposed to serve which customers? In the indirect channels of distribution, the functions of buying, selling, transporting, storing, are undertaken by the middlemen. There may still be confusion and conflicts and they have to be constantly addressed and redressed. Three Level Channel – (Producer-Agent-Wholesaler-Retailer-Customer): This is a very long channel of distribution in which three middlemen are involved, namely agent, wholesaler and retailer. Road transportation of goods to and from docks is needed. It enables the producer to have direct contact with customers and full control over the distribution of his product. (ii) Demand for a Factor is Joint Demand: The demand for various factors of production is necessarily a joint demand. As we know, there are four factors of production-land, labour, capital and organisation. The salespersons would do most of the tasks of the sales function for the big accounts but the telemarketers would be required to take manage routine matters with them under the guidance of the respective salespersons. Credit function – It consists of providing credit to another member of a distribution channel. Customer service levels can be improved by plugging these gaps. But, in practice, there are cases where the wholesaler combines manufacturing and retailing operations with his main function of buying and selling in large lots. It is quite suitable for small-scale producers whose product line is narrow and who require the expert services and promotional support of wholesalers. It works to reduce inventory. Multi-channel marketing like these occurs when a single firm sets up two or more marketing channels to reach one or more customer segments. ii. Share Your PDF File iv. And the company has to debate and fix the new relationships, responsibilities and compensation structures as precisely as possible. vi. Door to door sales e.g., Utensils, ladies garments, cosmetics, items of daily use Vim, Surf etc. But, at the first stage, when the market is unaware of the product, even at higher cost, this system is better. It is the most effective method of product distributions and effectively used for promoting clothes, machines, automobiles, furniture, etc. A vendor develops a channel strategy to determine what types of intermediaries to target and how to optimize partner relationships to increase sales and improve distribution. Modern manufacturer may also sell their product online through their official website. Infrastructure facilities like number and locations of warehouses, availability of suitable modes of transport, and the level of inventories that have to be maintained at various locations determine die responsiveness of the physical distribution system.