This is the process or path through which goods get to the hands of consumers. It is also called a chain of distribution. The following are some of the channels of distribution.
Factors for Consideration before Choosing a Particular Channel
(i) Number of potential buyers must be put into consideration
(ii) The channel used by competitors of the firm must be analysed before choosing one
(iii) Consideration of the resources of the producer
(iv) The nature of the goods must be considered
(v) Size of order should be considered
(vi) Location of customers must be considered
Functions of Agents
1. He must obey his principal’s lawful instructions.
2. The agent must not make secret profit or take bribe.
3. The interest of an agent must not conflict with the interest of the principal.
4. He must not disclose confidential information regarding his principal’s affairs.
5. He must keep and render proper accounts of all the transactions to the principal.
6. The agent must exercise due care and skill in the performance of his duties.
7. He must not delegate the performance of his duties to another party.
8. He is principally employed to act on behalf of his boss.
Evaluation Questions
1. Define a wholesaler trade
2. State five functions of the wholesaler to the manufacturer and retail respectively
3. Draw up three ways by which goods can pass from the producer to the consumer.
4. Which channel is the shortest and why?
Responses