Distribution

							Distribution
Channels

      Manufacturer to consumer (most direct)
      Manufacturer to wholesaler to retailer to consumer (traditional)
      Manufacturer to agent to retailer to consumer (current)
      Manufacturer to agent to wholesaler to retailer to consumer
      Manufacturer to agent to customer ( ex : AMWAY )

Manufacturers

Reasons for direct selling methods

      Manufacturer wants to demonstrate goods.
      Wholesalers, retailers and agents not actively selling.
      Manufacturer unable to convince wholesalers or retailers to stock product.
      High profit margin added to goods by wholesalers and retailers.
      Middlemen unable to transport.

Reasons for indirect selling methods

      Manufacturer does not have the financial resources to distribute goods.
      Distribution channels already established.
      Manufacturer has no knowledge of efficient distribution.
      Manufacturer wishes to use capital for further production.
      Too many consumers in a large area; difficult to reach.
      Manufacturer does not have a wide assortment of goods to enable efficient marketing.

Wholesalers

Reasons for using wholesalers

      Bear risk of selling goods to retailer or consumer
      Storage space
      Decrease transport costs
      Grant credit to retailers
      Able to sell for the manufacturers
      Give advice to manufacturers
      Break down products into smaller quantities

Reasons for bypassing wholesalers

      Limited storage facilities
      Retailers' preferences
      Wholesaler cannot promote products successfully
      Development of wholesalers' own brands
      Desire for closer market contact
      Position of power
      Cost of wholesalers' services
      Price stabilisation
      Need for rapid distribution
      Make more money

Ways of bypassing wholesalers

      Sales offices or branches
      Mail orders
      Direct sales to retailers
      Travelling agents
      Direct Orders

Agents

      Commission agents work for anyone who needs their services. They do not acquire
       ownership of goods but receive del credere commission.
      Selling agents act on an extended contractual basis, selling all of the products of the
       manufacturer. They have full authority regarding price and terms of sale.
      Buying agents buy goods on behalf of producers and retailers. They have an expert
       knowledge of the purchasing function.
      Brokers specialize in the sale of one specific product. They receive a brokerage.
      Factory representatives represent more than one manufacturer. They operate within a
       specific area and sell related lines of goods but have limited authority regarding price and
       sales terms.