January 30, 2024

What Are the Five Basic Channels for Consumer Goods?

The five basic channels for consumer goods are - direct marketing, selling through authorised dealers, selling through wholesalers and distributors, selling through retailers and sales through agents. Manufacturers can choose one or more of these channels to distribute their products to consumers. The type of channel chosen depends on the nature of the product and the degree of control required by a manufacturer.

Direct Marketing

The shortest channel of distribution for consumer goods is direct selling. This involves selling directly from the factory to customers. The manufacturer can achieve this by opening sales counters in departmental stores or by arranging to deliver the goods through mail order catalogues. Some manufacturers also set up their own shops in various localities e.g., Bata Shoe Company Shops. This method of distribution is particularly suitable for perishable or expensive goods like medicines, watches and clothes etc.

Indirect Selling

In indirect distribution, the title and risk are transferred from producer to the intermediary at each level. The number of levels can vary and they are often used to reach larger market areas. The main problem with this system is the fact that the supply of goods may become erratic at one or more points in the chain. This can make it difficult to cope with variations in consumer demand.

The other type of indirect distribution channel is the two-level channel. In this system, there are two middlemen between the manufacturer and the customer. The first middleman, known as the agent or distributor, sells on commission and does not take title to the goods. The second middleman, the wholesaler or distributor, takes title to the goods and then sells them on to the retailer.

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