Chapter 11, Problem 1QA

Summary Introduction

To define:The concept of Channel of distribution and channel intermediaries.

Introduction:

Channel:A channel is used to create utility for the customers such as possession utility, place utility, and time utility. As the market evolves, the channel keeps on evolving.

The Channel of Distribution:To make the products/services available for the customers, there are certain set of intermediaries or organizations which are interdependent such as distributors, wholesalers, retailers, etc. which work together in the process to make the products/services available for the customers to consume.

Channel Intermediaries:These are the independent organizations that help in making the goods and services available for the use or consumption of the customer.

Explanation of Solution

  

A Distribution Channel performs a lot of tasks such as:

• It facilitates search from both ends of the market i.e. the demand and the supply sides.
• The transaction process is standardized to make the flow of goods and services efficient throughout the channel.
• Reduction in the number of contacts which reduces the distribution cost.
• Channel helps in sorting, accumulation, and allocation of the goods and services for the customers.

Channel Intermediaries:These are the independent organizations that help in making the goods and services available for the use or consumption of the customer. The intermediaries are such as agents, retailers, distributors, and wholesalers involved in the Distribution channel.

Channel Intermediaries perform a lot of tasks such as:

• Spatial Discrepancy: The location gap should be filled between the buyer and the seller. The reduction of such a gap is performed by a channel intermediary because they are responsible to keep and maintain the stock at the marketplace for the customers.
• Time Discrepancy/ Temporal Discrepancy: Someone should be there to provide the products at the right time because the products are made in different time zones and sold in different time zones.
• Breaking the Bulk: Someone who could convert the truckload to cartload and from cartload to caseload because the customer needs only one or few pieces.
• Assortment: Someone who could accumulate and build that assortment because a customer needs a limited quantity of large variety.