Manufacturers must find the most efficient ways of getting the goods manufactured into the hands of consumers.
The channels/chains of Distribution
Channels of distribution refer to the means by which commodities reach the hands of consumers from the plant of manufacturers. This may be done directly from the manufacturer to the consumer or indirectly through middlemen such as wholesalers and retailers.
Types of Channels
1. Direct Channel – Manufacturer – Consumer
Goods are bought directly from the producer e.g. purchasing furniture from a manufacturer.
2. Indirect channels (a) Manufacturer – Retailer – Consumer
Goods are bought from a middle man e.g. a retailer. Retailers display goods, sell in small convenient quantities and offer credit. They therefore aid manufacturers in moving goods quickly.
3. Indirect channel (b) Manufacturer –Wholesaler – Retailer – Consumer
The wholesaler is a second muddle man/link on the chain. The wholesaler purchases in bulk from the manufacturer and stores them in large warehouses. They therefore assists manufacturers by moving large amounts of items from plant Retailers purchase goods from wholesalers and sell them in smaller quantities to consumers.