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Channel 3 Use a wholesaler and retailer as intermediaries (Disadvantages,…
Channel 3 Use a wholesaler and retailer as intermediaries
Involves using a wholesaler, who performs the function of breaking bulk.
Disadvantages
Takes longer for fresh product to reach the shop
Wholesaler mightt be far from the shop
Wholesaler may nott have full range off products to sell
May be more expensive for the small shop to buy from a wholesaler than if it bought straight from the manufacturer
The consumer price is often higher than 'direct selling' as both the wholesaler and retailer have to cover costs and make a profit
Avantages
Small retailers can purchase fresh products in small quantities from the wholesaler because they have relatively short 'shelf life'
Wholesaler may give credit to retail customers
Wholesaler saves storage space + reduce storage costs
Whole saler may deliver to the small retailer => saving transport costs.
Wholesaler can gice advice to small retailers about what is selling well
CHANNEL 1- DIRECT TO CONSUMERS
Advantages
Simple
Suitable for products that are sold straight from the farm
Lower price if sold direct to customers
Products can be sold by mails order catalogue/ via the internet
Disadvantages
May not be suitable for products which cannot be easily be sent by post
Can be expensive to send products by post
Usually impractical because the consumers probably don't live near to the factory
Example
Car components are sold directly to the car producer
CHANNEL 2- USING A RETAILER AS THE ONLY INTERMEDIARY
Advantages
Producer sells large quality to retailers
Less cost than channel 1
Disadvatages
No direct contact with customers
The price is often higher than direct selling
CHANNEL 4- USING AN ADDITIONAL INTERMEDIARY
Advantages
Manufacturer may not know the best way to sell the product in other markets
Agents will be in the best position to select the most effective places in which to sell
Disadvantages
Producer has less control over the way the product is sold to the customer
4 CHANNELS OF DISTRIBUTION