page_title: Marketing channel
section_title: Producer → Wholesaler → Retailer → Customer (Two-level Channel)
hierarchical_section_title: Marketing channel / Types / Producer → Wholesaler → Retailer → Customer (Two-level Channel)
caption_attribution_description: English: Empty shelves in the Costco Warehouse store in Waltham, Massachusetts on Monday afternoon, March 2, 2020, after a weekend of intense shopping in the early days of the COVID-19 crisis.
context_page_description: A marketing channel is the people, organizations, and activities necessary to transfer the ownership of goods from the point of production to the point of consumption. It is the way products get to the end-user, the consumer; and is also known as a distribution channel. A marketing channel is a useful tool for management, and is crucial to creating an effective and well-planned marketing strategy.
  Another less known form of the marketing channel is the Dual Distribution channel. This channel is a less traditional form that allows the manufacturer or wholesaler to reach the end-user by using more than one distribution channel. The producer can simultaneously reach the consumer through a direct market, such as a website, or sell to another company or retailer that will reach the consumer through another channel, i.e., a store. An example of this type of channel would be franchising.
  Roles of marketing channel in marketing strategies
  Links producers to buyers.
  Influences the firm's pricing strategy.
  Affecting product strategy through branding, policies, willingness to stock.
  Customizes profits, install, maintain, offer credit, etc.
context_section_description: Wholesalers buy the products from the manufacturer and sell them to the consumer. In this channel, consumers can buy products directly from the wholesaler in bulk. By buying the items in bulk from the wholesaler the prices of the product are reduced. This is because the wholesaler takes away extra costs, such as service costs or sales force costs, that customers usually pay when buying from retail; making the price much cheaper for the consumer. However, the wholesaler does not always sell directly to the consumer. Sometimes the wholesaler will go through a retailer before the product gets into the hands of the consumer. Each dealer (the manufacturer, the wholesaler, and the retailer) will be looking to make a decent profit margin from the product. So each time the buyer purchases the merchandise from another source, the price of the product has to increase, in order to maximize the profit each person will receive. This raises the price of the product for the end-user. Due to the simultaneous and joint work of wholesaler and retailer, a trade can only be beneficial if; a market is situated on a larger area, the supply of goods and products is carried out small but urgent consignments (products), it can be cost-effective and profitable by supplying bigger consignments (products) to fewer customers. Industrial factories are in the seek of using advantages of mass production in order to produce and sell big lots (batches) while retailers look and prefer purchasing smaller consignments. This method for factories could lead to instant sales, high efficiency, and cost-effectiveness. Therefore, particularly in these situations wholesaler now plays a role where it reconciles these contradictory aspirations. The wholesaler purchases big lots then divides minimizes after resells them to further retailers. The work of wholesaler facilitates and makes it less burdensome for the transportation of production. Hence, an amount of delivered goods diminishes through the use of this channel (the wholesale). For example, if five manufactories supply goods directly to hundred different retail stores, then they will have to have 500 of deliveries (5 times 100). However, if those five manufactories supply the same wholesaler, and the wholesaler at this stage supplies 100 different retailers, then the total number of deliveries will decrease to 105 (5 plus 100). Another important component to consider in the practice of wholesaling is storage. Storage of goods is one of the characterized aspects of the work of a wholesaler. Wholesaler regulates the deliveries of goods, having synchronized the production and consumption of material goods. Moreover, he as the wholesaler further assumes the financial obligations related to the immobilization of funds invested in the creation of commodity stocks. Although, the chain of transition suggests that the wholesaler directly communicates and deals with a manufacturer may not be unambiguous. The contribution of a distributor is highly acknowledged and plays a crucial role in distributing flows of goods before it gets in the hands of wholesalers, retailers and so on. A distributor is the representative of the manufacturer and performs functions on behalf of the manufacturer for the distribution of goods from producer to wholesaler or retailer. A distributor is always in the seek out for orders from different clients and possesses activeness in promoting producer's products and services. The main tasks of a distributor are; study the market and the creation of databases of consumers, advertising of goods, an organization of a service for the delivery of goods, stocking up the inventory levels, the creation of a stable sales network, which includes dealers and other intermediaries, depending on the market situation. Distributors scarcely sell a manufactories' goods directly to customers.
caption: Shelves in a wholesaler warehouse. Customers are able to purchase products in bulk.
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