Channel structure is distinguished on the basis of the number of intermediaries.
Channel structure is
distinguished on the basis of the number of intermediaries. There are different
levels in a channel structure. The common levels are zero-level, one-level,
two-level, three-level. Each level presents both opportunities and challenges
for the marketer. Exhibit 4.6 gives a picture of the different levels
Zero-level structure is one of the simplest
forms of the channel structure. Here organizations like Avon, Eureka Forbes use
direct selling mode to take the products from their production houses to the
consumers directly. A lot of money has to be spent in order to make this
channel structure effective, as there is no third party to take your product to
the consumer. Even a bakery can come as a firm, which bakes cakes and sells it
directly to the consumers. Marketers who use the mailing services, toll-free
numbers are also using this service.
One-level structure is one in which we have
one intermediary acting as a link between the manufacturer and the consumer.
Here the retailers procure goods directly from the manufacturer and supply it
to the consumers. Retailers like Viveks, Wal-Mart deal directly with the manufacturer.
In some cases in order to retain profitable and reputed retailers the
manufacturers act as wholesalers. One of the advantages for the intermediaries
is the customization and the discounts they receive.
Two-level channel has two people interceding
before the product reaches the consumer. Here there would be a wholesaler and a
retailer who takes the efforts for a speedy delivery and this is one of the
most commonly used structures for consumer goods. In the case of Metro, most of
the small retail and Kirana stores buy all the merchandise from Metro and in
urn sell them to the consumer. One of the advantages of the four-level
structure is the benefit of using the wholesaler in the distribution of
Three-level channel happens predominantly
when the firms plans to go global. When a manufacturer enters another country,
it always holds good when he uses the help of agents to operate in that
environment. The agents are people who know the legal procedures and who can
negotiate with the host country in case of a problem. Most of the airline firms
that operate in different countries take the help of agents to penetrate the
Tags : MARKETING MANAGEMENT - Structure and Design of Marketing Channels
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