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Marketing Management/Essentials of Marketing

Notes 9.2.1 Consumer Product Channels

Companies producing consumer products may use several different types of channels. Producers
can choose zero-level channel (also called direct-marketing channel). This approach involves
moving product direct from producer to customer. Zero-channel system does not involve
resellers. Examples include company owned stores, telemarketing, mail order, and door-to-
door selling etc.

Example: Sara Lee, Amway, Avon cosmetics, Eureka Forbes, Amazon and others use
zero-channel.
This is a quite simple arrangement but may not be the most efficient or economical means of
distributing products to consumers. Sumit K. Majumdar and Venkatram Ramaswamy suggest
that faced with making strategic choice of going direct to the consumer or using channel partners,
a company must weigh the benefits to consumers against the transaction costs involved in using
intermediaries before going direct to consumers.

Figure 9.3: Consumer Product Channels

Manufacturer Manufacturer Manufacturer Manufacturer

Agents

Wholesalers Wholesalers

Retailers Retailers Retailers

Consumers Consumers Consumers Consumers

A B C D

One-level channel (B) moves products from the manufacturer to retailer. Retailer makes these
products available to consumers. Large retailers such as supermarkets and chain stores prefer to
buy large quantities of goods from manufacturers. Two-level channel (C) has been quite popular
among consumer product companies since long. Between a manufacturer and consumers there
are two types of channel intermediaries – wholesalers and retailers. The goods pass from producer
to wholesalers, then to retailers, and finally to consumers. This channel arrangement is a practical
option to producers who sell to millions of consumers in several geographic areas through few
thousand to lakhs of retail shops including the locality kirana stores.

Did u know? In India, there are an estimated 12 million grocery outlets.

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