It is concerned with the system of marketing institution through which goods or series are transferred from the producers to the consumer. A larger number of products do not reach the consumers directly, there is an indirect method of dealing between producer and consumer.
A channel of distribution for a product is the route taken by the title to the goods as they move to form the producer to the ultimate consumer or industrial user
A channel always comprises both the producer and the final consumer, as well as all agents, merchants and middlemen involved in the title transfer.
The channel does not include firms such as high ways banks, insurance companies and other middlemen institutions which perform marketing and advertising functions but play no prominent part in negotiating purchases and sales.
A channel of distribution is also called a Trade channel
This method of selling is the most important of all distribution channels. Small producers, wholesalers and retailers find this channel the only economically feasible choice. This is also known as the “Traditional” channel for consumer goods.
Sales by producers to retailers have become even more common as the scale of production has increased. This method of selling is employed largely by the automobile industry and by other producers who sell large quantities on contract to chain stores, mail-order houses and other large retailers.
Usually, Contracts are made directly between the purchaser and the producer without the intervention of a salesman who calls regularly.
Some producers sell direct to end users, with no middlemen involved. This type of operation is found more frequently in the marketing of industrial and some agricultural goods and services than in marketing to domestic consumers. Door to door selling and mail order, however, are examples of direct consumer marketing.
If production is on a very large scale, manufactures may be able to operate their own retail shops. Producers own shops are familiar in a number of retail fields, including shoes, food, clothing, varnish, furniture, paint petroleum and diary products.
This channel involves intent on the part of the producer to bypass the wholesaler. It is sometimes employed by producers who manufacture large quantities of product. This method of selling is used by some manufacturers in several industries i.e. drugs and groceries market.
Small producers prefer to use a manufacture’s agent, selling agent or broker who in turn go to wholesalers who sell to small stores.
Many producers often use