(When a manufacturer sells direct to the consumer)
This occurs when customers post orders for books or magazines direct to the publishers who then send them their orders direct. This ensures the publisher of selling to as many people as possible and can increase sale. Customers will also benefit since they’re assured of getting the latest issue or publication
It also occurs when something is made especially for a customer e.g. a suit, made-to-order furniture. An individuality in design normally demand us to pay more than what we have to pay for the same type of good which is mass produced. Example:- tailoring, saloons and interior furnishing
It also occurs in expensive and highly and specialized goods which are purchased only occasionally by the government or big private companies. Examples:- aeroplanes, ships, railway rolling stock
2. Manufacturer Cooperative to wholesaler [Rebate price Retail price]
Members Public
When a manufacturer sells to a cooperative wholesaler who in turn supplies the cooperative retail in his district
Members of the public, including the members of such cooperative retail shop then buy the goods from them
Cooperative members are able to buy the goods at a rebate
3. Manufacturer to Retailers {Retail price (with a discount)}
Public
(When a manufacturer sells to the retailers who in turn sell to the consumers)
Most large retailers like supermarket, department store have the financial resources to buy in bulk direct from the manufacturers. The main advantage of bulk buying is the large discounts so that they can offer a greater variety of goods at competitive price
In many cases, the retail shop is owned by the manufacturers, for example, selling footwear and medicine. These manufactures have large resources to open their own retail outlets
Sometime, the retailers may be “tied” to the manufacture. Example petrol stations selling only one brand of petrol
4. Manufacturer to Wholesaler Retailers
(When a manufacturer sells to a wholesaler who then sells to the retailers in smaller quantities. Then the retailers who in turn sell to the customers)
It occurs when the producers themselves are unable to market the excess goods themselves because of financial constraints or the lack of access to widely markets due to lack of contacts, commercial know-how
For example, the rural producers who produce like fish, paid, vegetables and so on, they are lack in packing specialty therefore they sent their product to the wholesaler who can pack them properly and transport them quickly to the big cities or town (in the same countries or overseas), where they sold to various retailer who in turn sell them to the consumers
Locally manufactured goods like ordinary household essentials which are stocked by small retailers are often distributed in this way since the retailers buy in too small a quantity to make it viable for the manufacturer to sell direct to them
Goods which sold this way become more expensive because of the cost of distribution and profit margins required by the wholesaler and retailer. However, consumers can be benefit from the wide variety of goods produced by many producer
The producer is free to devote all his attention and resource in producing better quality of goods since the marketing has been done by the wholesaler
The retailer needs little capital as he needs to maintain only a small stock. This is because it is easy for him to get new and hence fresher stocks from the supplier (wholesaler) once his stock is depleted
5. Manufacturer to Sole Agent
When an overseas manufacturer appoints a sole agent in the home market to manage the sale and distribution of his goods as well as to provide after-sale services
The sole agent is responsible for getting reliable retailers to market the goods throughout the country. Example: Sell imported cars, cosmetics and electrical goods
AGENTS and THEIR WORK
An agent is a person who deals with goods on the behalf of another person is called the principal
There are two type of agents
i) Factor
ii) Broker
Differences between Factor and Broker
1.
factor:-
Has possession of goods
broker:-
No possession of goods therefore have to bring buyer and seller together
2.
factor:=
Can sell the goods in his own name
broker:-
Does not sell goods in his own name
3.
factor:-
Receive payment and issue valid receipt
broker:-
Not allowed to receive payment or issue receipt
4.
factors:-
Keep whatever profit he made
broker:-
Receive commission
5.
factor:-
Has legal claim
broker;-
No legal claim of goods
Factors that influence the choice of the type of channel of distribution
1. Nature of goods to be marketed
Goods that is perishable, e.g. cakes and bread, it must be sold quickly as possible. Normally it sold directly to the consumers through the producer’s own retail outlets or channelled it nearby retail outlet as soon as it produced
Goods that can last longer can be handled by more intermediaries in order to ensure a larger market
2. Size of market
Producers who wanted their goods marketed as widely as possible, they did not want to saddle themselves with problems of managing their own retail outlets and normally they sold their goods to wholesalers. Therefore, the bigger the market, the larger will be the number of intermediaries needed
Producers who desired to a small exclusive clientele may opened their own retail outlets e.g. boutiques which sell expensive, exclusively designed ready made garments
3. Quantity of goods bought
Most producers are normally willing to accept larger retailers or wholesalers than the small retailer. This is largely due to the orders from the small retailers which is normally in small quantity and involved a lot of paperwork
4. Size of the firm producing the goods
A very big firm which had the financial and human resources normally not only produce the goods but also set up their own retail outlets
Small – sized producer may prefer to concentrate the technical aspects of producing and leave the marketing of goods to others
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