Please enable JavaScript.
Coggle requires JavaScript to display documents.
Benefits and drawbacks of each distribution channel - Coggle Diagram
Benefits and drawbacks of each distribution channel
Single-intermediary
channel
Advantages:
-
Retailers incur the cost of holding
inventories.
• Retailers display the products and
offer after-sales service.
• Retailers should be in locations that
are convenient to consumers.
• Producers focus on production, not
on selling the products to consumers
Disadvantages
The intermediary takes a profit
mark-up, making the product more
expensive to consumers.
• Producers lose control over the
marketing mix.
• The outlet is not exclusive as
retailers sell competitors’ products
too.
consumers. • Producers pass on delivery costs to
retailers
Zero-intermediary channel
No mark-up or profit margin is taken by intermediaries.
The producer has complete control over the marketing mix.
It is quicker than other channels so may lead to fresher food products.
Direct contact with consumers offers useful market research.
Advantages
Disadvantages
All storage and inventory costs have to be paid by the producer.
There are no retail outlets so consumers cannot see and try before they buy.
It may not be convenient for consumers.
No after-sales service is offered by shops.
It is expensive to deliver each item to consumers.
Two Channel Intermediary
Disadvantages:
Wholesalers hold the goods and buy
in bulk from producers.
• It reduces producers’ inventory
costs.
• Wholesalers pay for the costs of
transport to retailers.
• Wholesalers buy in large quantities
and sell in small quantities.
Advantages:
Another intermediary takes a profit
mark-up, making the product more
expensive to consumers.
• Producers lose further control over
the marketing mix.
• It slows down the distribution
chain.