Theory question 102
Wholesale TradeCommerce 2 (answer five questions)
(a) State any five channels of distribution for consumer goods.
(b) Explain five factors to be considered before choosing a particular channel.
Show the model answer
(a) Any five: producer → wholesaler → retailer → consumer; producer → retailer → consumer; producer → consumer (direct, e.g. own shops, mail order, door-to-door); producer → agent → wholesaler → retailer → consumer; producer → agent → retailer → consumer; producer → wholesaler → consumer; producer → agent → consumer.
(b) Any five, explained: nature of the product – perishable, bulky, technical or expensive goods use short channels; number and location of customers – many scattered buyers need wholesalers and retailers, few concentrated buyers can be served directly; size of orders – large orders favour direct sales; financial strength of the producer – a rich producer can run his own outlets and salesmen; cost of each channel and the margins of middlemen; producer's wish to control price, quality and after-sales service; availability and efficiency of middlemen; competitors' channels and government regulations.
List channels as chains of arrows; in (b) say how each factor makes the channel longer or shorter.