Different types of distribution middlemen and their functions for Marketing Management Mcom sem 2 Delhi University
Different types of distribution middlemen and their functions for Marketing Management MCOM sem 2 Delhi University:- we will provide complete details of Different types of distribution middlemen and their functions for Marketing Management MCOM sem 2 Delhi University in this article.
Different types of distribution middlemen and their functions for Marketing Management Mcom sem 2 Delhi University:-Various kinds of Middlemen in Distribution Channel
The distribution channel starts with the producer and ends with the consumer. In between, there are many intermediaries or middlemen. These middlemen are of two types, namely,
- Merchant middlemen and
- Agent middlemen.
A merchant middleman is one who takes title to the goods and later carries out sales. An agent middleman, on the other hand, does not take title to goods. He simply gets orders from the buyers and passes on the same to the producers.
Different types of distribution middlemen and their functions for Marketing Management Mcom sem 2 Delhi University:-Kinds of Middlemen in Distribution Channel
The various kinds of middlemen in the market are:
- Wholesalers: They are the people who buy in bulk from the producers and sell in small quantities to the retailers.
- Retailers: They are the people who buy in small quantities from the wholesalers and sell to the ultimate consumers.
- Agents: They are the middlemen who do not take any title to goods. They render all services required in marketing. They represent either the seller or the buyer. They receive commission for their work.
- Brokers: Like agents, brokers also represent either the buyer or the seller. They do not usually have physical control over the goods in which they deal. Example: share brokers. They get ‘brokerage’ for their work.
- Dealers: They are the business houses that resell goods. Example: Viveks, Vasanth & Co. and so on.
- Distributors: They are the same as wholesalers.
- Jobbers: They are associated with stock exchanges. A jobber deals in certain securities. He transacts only with a broker and does not deal directly with the public.
- Branches: These are establishments maintained by manufacturers at different places to promote sales. Example: Bata Shoe company.
- Consumer Co-operatives: These are owned and managed by the ultimate consumers. Such cooperatives buy and distribute goods mainly to the members.
- Company show room: A company may run its own show room to sell its goods. Example: Philips, BPL and Thomson have their own showrooms in Chennai.
- Facilitating Agencies: These agencies are directly or indirectly involved in the performance of certain marketing functions. These are transport organizations, warehouses, banks, insurance companies and so on
Different types of distribution middlemen and their functions for Marketing Management Mcom sem 2 Delhi University:-Functions of Distribution Channels
Following are the main functions performed by the distribution channels:
Middlemen obtain the supplies of goods from various suppliers and sort them out into similar groups on the basis of size, quality etc.
In order to ensure a continuous supply of goods, middlemen maintain a large volume of stock.
It involves packing of the sorted goods into small marketable lots like 1Kg, 500 gms, 250 gms etc.
Middlemen obtain a variety of goods from different manufacturers and provide them to the customers in the combination desired by them. For example, rice from Dehradun & Punjab.
5. Product Promotion:
Sales promotional activities are mostly performed by the producer but sometimes middlemen also participate in these activities like special displays, discounts etc.
Middlemen negotiate the price, quality, guarantee and other related matters about a product with the producer as well as customer.
7. Risk Taking:
Middlemen have to bear the risk of distribution like risk from damage or spoilage of goods etc. when the goods are transported from one place to another or when they are stored in the god-owns.
Different types of distribution middlemen and their functions for Marketing Management Mcom sem 2 Delhi University:-Types of Distribution Channels:
Broadly, Channel of distribution is of two types viz., (1) Direct Channel (2) Indirect Channel.
1. Direct Channel or Zero Level Channels:
When the producer or the manufacturer directly sells the goods to the customers without involving any middlemen, it is known as direct channel or zero level channel. It is the simplest and the shortest mode of distribution. Selling through post, internet or door to door selling etc. are the examples of this channel. For example, Mc Donalds, Bata, Mail order etc.
Methods of Direct Channel are:
(a) Door to door selling
(b) Internet selling
(c) Mail order selling
(d) Company owned retail outlets
2. Indirect Channels:
When a manufacturer or a producer employs one or more middlemen to distribute goods, it is known as indirect channel.
Different types of distribution middlemen and their functions for Marketing Management Mcom sem 2 Delhi University:-Following are the main forms of indirect channels:
(a) Manufacturer-Retailer-Consumer (One Level Channel):
This channel involves the use of one middleman i.e. retailer who in turn sells them to the ultimate customers. It is usually adopted for speciality goods. For example Tata sells its cars through company approved retailers.
Manufacturer→ Retailer→ Consumer
(b) Manufacturer-Wholesaler-Retailer-Customer (Two level channels):
Under this channel, wholesaler and retailer act as a link between the manufacturer and the customer. This is the most commonly used channel for distributing goods like soap, rice, wheat, clothes etc.
Manufacturer→ Wholesaler→ Retailer→ Customer
(c) Manufacturer-Agent-Wholesaler-Retailer-Consumer (Three level channels):
This level comprises of three middlemen i.e. agent, wholesaler and the retailer. The manufacturers supply the goods to their agents who in turn supply them to wholesalers and retailers. This level is usually used when a manufacturer deal in limited products and yet wants to cover a wide market.
Manufacturer → Agent → Wholesaler → Retailer → Consumer
Different types of distribution middlemen and their functions for Marketing Management Mcom sem 2 Delhi University:-Factors Determining Choice of Channels of Distribution:
Following are the main factors which help in determining the channels of distribution:
1. Product Related Factors:
Following are the important product related considerations in deciding on channels of distribution:
(a) Nature of Product:
In case of industrial goods like CT scan machine, short channels like zero level channel or first level channel should be preferred because they are usually technical, expensive, made to order and purchased by few buyers. Consumer goods Ike LCD, refrigerator can be distributed through long channels as they are less expensive, not technical and frequently purchased.
(b) Perishable and Non- Perishable Products:
Perishable products like fruits or vegetables are distributed through short channels while non perishable products like soaps, oils, sugar, salt etc. require longer channels.
(c) Value of Product:
In case of products having low unit value such as groceries, long channels are preferred while those with high unit value such as diamond jewellery short channels are used.
(d) Product Complexity:
Short channels are preferred for technically complex goods like industrial or engineering products like machinery, generators like torches while non complex or simple ones can be distributed through long channels.
2. Company Characteristics:
Following are the main Company Characteristics offering choice of channel of distribution:
(a) Financial Strength:
The companies having huge funds at their disposal go for direct distribution. Those without such funds go for indirect channels.
Short channels are used if management wants greater control on the channel members otherwise a company can go in for longer channels.
3. Competitive Factors:
Policies and channels selected by the competitors also affect the choice of channels. A company has to decide whether to adopt the same channel as that of its competitor or choose another one. For example, if Nokia has selected a particular channel say Big Bazaars for sale of their hand sets, other firms like Samsung and LG have also selected similar channels.
4. Market Factors:
Following are the important market factors affecting choice of channel of distribution:
(a) Size of Market:
If the number of customers is small like in case of industrial goods, short channels are preferred while if the number of customers is high as in case of convenience goods, long channels are used.
(b) Geographical Concentration:
Generally, long channels are used if the consumers are widely spread while if they are concentrated in a small place, short channels can be used.
(c) Quantity Purchased:
Long channels are used in case the size of order is small while in case of large orders, direct channel may be used.
5. Environmental Factor:
Economic factors such as economic conditions and legal regulations also play a vital role in selecting channels of distribution. For example, in a depressed economy, generally shorter channels are selected for distribution.