Marketing channel
The producer sells the goods or provides the service directly to the consumer with no involvement with a middle man such as an intermediary, a wholesaler, a retailer, an agent, or a reseller.
In addition, this particular channel has three main ways of direct selling and these include; peddling, mail-order sales and trade through manufacturer-owned stores.
[5] Peddling is an outdated version of trade between two parties and consignments are often sold in small amounts by sellers who are traveling to different places.
[5] Due to distance of goods and products between producer and a seller, it takes an advantage to be an effective channel of distribution in its kind and these advantages are; producers pay close attention with customers and are aware of theirs' thought's and ideas that are shared with them, there are no intermediaries that could substantially reduce the profit of a company which would then result in significant loss and delivery time is shortened due to having no obstacles like middleman etc.
[6] On the other hand, technological innovations, the aid of the internet and convenient smartphones are now changing the way that commerce works significantly.
The proliferation of internet-direct channels means that internet companies will be able to produce and directly trade services and goods with consumers.
Intermediaries (retail service) are useful due to their experience, professionalism, ability to offer products to the target market, and connections in the industry, as well as advantages in specialization and high quality of work.
[10] This channel is considered to be beneficial if the volume of pre-sale and post-sale is insignificant, the amount of segments of the market is not enormous, and the assortment of goods and products is broad.
Ultimately, the significance of intermediaries in distribution business is vital as they help consumers obtain particular goods of a specific brand without unnecessary steps.
Hence, each time the buyer purchases the merchandise from another source, the price of the product has to increase, in order to maximize the profit each person will receive.
Due to the simultaneous and joint work of wholesaler and retailer, a trade can only be beneficial if a market is situated on a large area and the supply of goods is carried out small but urgent consignments (products), it can be cost-effective and profitable by supplying significant consignments (products) to fewer customers.
Industrial factories want to utilize the advantages of mass production to produce and sell big lots (batches) while retailers look and prefer purchasing smaller consignments.
The contribution of a distributor is highly acknowledged and plays a crucial role in distributing flows of goods before it gets in the hands of wholesalers, retailers and so on.
The main tasks of a distributor are to study the market and the creation of databases of consumers, advertising of goods, an organization of services for the delivery of goods, stocking up the inventory levels, the creation of a stable sales network, which includes dealers and other intermediaries, depending on the market situation.
Their cooperation generates a greater output in terms of further profitability, by discernment and exploring newer markets of sales, and building a better business relationship.
The participants of distribution channels must have knowledge and experience not only for the effective maintenance of target segments but also to maintain the competitive advantage of the manufacturer.
[9] However, he can maintain a competitive advantage over other firms in the form of a particular brand if he has obtained the right to exclusively represent the manufacturer, and earn profit.
A marketing channel can be as short as being direct from the vendor to the consumer or may include several inter-connected (usually independent but mutually dependent) intermediaries such as wholesalers, distributors, agents, retailers.
[15] Short term channels are influenced by market factors such as: business users, geographically concentrated, extensive technical knowledge and regular servicing required, and large orders.
Short term competitive factors include: manufacturing feels satisfied with marketing intermediaries' performance in promoting products.
Long term market factors include consumers, geographically dispersed, little technical knowledge and regular servicing is not required, and small orders.
