Question

Long answer type questions.

What is channel of distribution? Explain various types of channel of distribution.

Answer 1

A channel of distribution refers to individuals, institutions and agents, who facilitate the process of distribution. As the potential consumers for a product are spread over a larger geographical area, it becomes difficult for producers or manufacturers to directly contact them for the sale of their products.

The following are the main types of channels of distribution:
i. Distribution through mercantile agents: This channel includes brokers or agents and commission merchants.

ii. Distribution through wholesalers and retailers: This is one of the more popular channels of distribution, wherein the wholesalers market products in large quantities and then, the retailers sell the same in smaller quantities.

iii. Distribution through retailers: In this channel, the producer distributes directly to the retailers. It is a short-term channel of distribution.

iv. Distribution directly to consumers: In this channel, goods are sold directly to consumers, either by producers or by door-to-door sellers.