Chapter 11, Problem 16AA

To determine

To discuss: The concept of distribution channels along with two common channels of distribution.

Explanation of Solution

Distribution channel serves as a network to get the product or service delivered from the manufacturer to the ultimate consumer. The two common channels of distribution are direct selling and indirect selling.

In direct selling the product reaches to the consumer directly from the place of its production without any involvement of middlemen like wholesalers and retailers.

In indirect selling the producer of the product send the goods to the middlemen who further initial the sales till it reaches the ultimate consumer. This can increase the price of the product as each intermediary adds its profit margin before selling it further.

Economics Concept Introduction

Introduction:

Distribution channels- it refers to a chain of intermediaries though which the good or service passes to reach the ultimate consumer. These intermediaries include wholesalers, retailers, distributors, franchises and even internet.