Number of Channel Levels

Distribution channels may be described by various channel levels involved. Each layer of marketing intermediaries that performs few work in bringing the product and its ownership closer to the last buyer is a channel level. Because the producer and the last consumer both perform a little work, they are part of every channel. We utilized the number of intermediary levels to show the length of a channel. Figure A indicates several consumer distribution channels of several lengths.

Channel 1, which is called a direct marketing channel, has no intermediary levels. It consists of company selling directly to consumers. The remaining channels in given Figure A are indirect marketing channels. Channel 2 consist one intermediary level. In consumer markets, this level is normally a retailer.

 For instance, cameras, tires, the makers of televisions, major appliances, furniture and many other products sell their goods directly to huge retailers which then sell the goods to last consumers. Channel 3 consist two intermediary levels, a retailer and a wholesaler. This channel is frequently used by small manufacturers of drugs, food, hardware and other products. Channel 4 consist three intermediary levels. For example, in the meatpacking industry, jobbers purchase from wholesalers and sell to smaller retailers who in general are not served by big wholesalers. Distribution channels along even more levels are sometimes found, but less frequently. From the producer's point of view, a greater number of levels mean less control and greater channel complexity.

Figure B indicate some common business distribution channels. The business marketer may directly use its own sales force to sell to business customers. It may also sell to industrial distributors, in turn, who sell to business customers. It may sell through manufacturer's representatives, or it may use these representatives or its own sales branches to branches and business customers to sell through industrial distributors. Therefore, business markets generally include multilevel distribution channels.

In the channel all institutions are linked by different types of flows. These include the flow of ownership, the physical flow of products, the payment flow, the information flow, and the promotion flow. These flows may make even channels with just one or a few levels very complicated.