Question

Identify and describe in detail the four categories of institutions that could be included in a distribution channel.

Answer 1

Distribution channel is the aggregate of all institutions engaged in supplying goods from manufacturing sector to consumers.

Such institutions are as below:

No.1) Manufacturer: If there is direct selling, goods are delivered by manufacturer to consumers directly. This is the process of door-to-door selling where sales persons are hired by the manufacturer to do such work. Since there are no intermediaries, goods could be supplied at lower priced.

No.2) Intermediaries: This is indirect channel where goods are delivered to consumers through intermediaries like agent, wholesaler, distributer, and retailer. The manufacturer has to give commission for doing such service that makes the price high.

No.3) Transportation: This is the institution for moving goods from manufacturing place to consumers’ place. Modes of transportation are rail, road, sea, and air; based on the distance of journey and affordability, the manufacturer has to choose the mode.

No.4) Logistic: Goods could be delivered through courier agency also. In such case the sender takes the initiative if the consumer gives consent. In most of the cases consumers pay courier charge; online purchasing falls in this category for the goods like shoe, cloths, mobile phone, etc.