Channel of distributions
Producer ----> consumer
Producer ---> retailer ----> consumer
Producer ----> wholesaler -----> retailer -----> consumer
Producer ----> agent ----> wholesaler ----> retailer ----> consumer
Pros
Cons
producer earned all profit
producers control all part of marketing mix
quickest methods
producers has direct contact with customers
consumers are not always see or try the products before purchase
high delivery costs
storage costs and promotional activities must be done
Pros
Cons
consumers see and try the products
retailer paid holding inventories costs
promotional activities paid by retailer
conveniently located for consumers
some profit taken by retailers
producers lose control in marketing mix
producer must pay delivery costs
competitor's products sell
Pros
Cons
Pros
Cons
wholesalers buy in bulk then break down for retailers
more channel of promotion
storage costs and tranposrt costs are shared
producer sells its product to a larger market
producers lose more control over marketing mix
middleman takes part of the profit
agent has specialist knowledge, especially foregin -> link between everyone
another middleman is added, reduced profit to the producer