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  • Channel of Distribution Advantages Disadvantages: Delivery Costs May Be High If There Are

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    Maximiliano Cañete
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    The document outlines different channels of distribution and their advantages and disadvantages from the perspective of producers. The four channels discussed are direct from producer to consumer, producer to retailer to consumer, producer to wholesaler to retailer to consumer, and producer to agent to wholesaler to retailer to consumer. Each additional middleman takes a share of profit but also takes on costs and responsibilities from the producer such as storage, delivery, advertising, and market knowledge.

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    The document outlines different channels of distribution and their advantages and disadvantages from the perspective of producers. The four channels discussed are direct from producer to consumer, producer to retailer to consumer, producer to wholesaler to retailer to consumer, and producer to agent to wholesaler to retailer to consumer. Each additional middleman takes a share of profit but also takes on costs and responsibilities from the producer such as storage, delivery, advertising, and market knowledge.

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    3 views1 page

    Channel of Distribution Advantages Disadvantages: Delivery Costs May Be High If There Are

    Uploaded by

    Maximiliano Cañete
    The document outlines different channels of distribution and their advantages and disadvantages from the perspective of producers. The four channels discussed are direct from producer to consumer, producer to retailer to consumer, producer to wholesaler to retailer to consumer, and producer to agent to wholesaler to retailer to consumer. Each additional middleman takes a share of profit but also takes on costs and responsibilities from the producer such as storage, delivery, advertising, and market knowledge.

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    © All Rights Reserved
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    of 1

    Channel of distribution Advantages Disadvantages

    Producer -4 consumer ■ All of the profit is earned by the producer. is Consumers are not always able to see
    ■ The producer controls all parts of the or try the product before they buy, for
    example if purchased online.
    marketing mix.
    ■ It is the quickest method of getting the product ■ Delivery costs may be high If there are
    to the consumer. This might be important for many customers over a wide area,
    goods that need to be consumed as soon after ■ All storage costs must be paid for by the
    production as possible, for example fresh fruit producer.
    and vegetables. ■ All promotional activities must be
    ■ The producer has direct contact with the carried out and financed by the
    consumer and this could provide useful market producer.
    research opportunities. lal

    Producer —> retailer-* ■ Consumers can see and try the product before ■ The retailer takes some of the profit
    consumer they buy. away from the producer.
    ■ The cost of holding inventories of the product ■ Producers lose some control of the
    is paid, in part, by the retailer, marketing mix.
    es The retailer will pay for advertising and other ■ The producer must pay delivery costs
    promotional activities. to the retailers.
    ■ Retailers are usually more conveniently ■ Retailers usually sell competitors'
    located for consumers. products as well.

    Producer wholesaler —> ■ The wholesaler buys in bulk from the producer ■ Another middleman - the wholesaler-
    retailer —> consumer and then breaks this down into smaller takes part of the profit from the
    quantities for retailers. producer.
    ■ Wholesalers will advertise and promote the ■ The producer loses even more control
    product to retailers. over the marketing mix.
    ■ The transport cost to the retailer is paid for by
    the wholesaler.
    ■ Wholesalers will pay for the storage costs of
    the products purchased from the producer.
    ■ Distribution of goods through wholesalers
    helps the producer to sell its goods to a larger
    market.

    Producer —> agent -3 ■ The agent has specialist knowledge of the ■ Another middleman is added to the
    wholesaler retailer-, market - especially a foreign market. They find channel of distribution which reduces
    consumer wholesalers and retailers who are prepared to the profit to the producer,
    buy the product from the producer.

    Table 13.1 Advantages and disadvantages of channels of distribution

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