The number of channel partners required for optimum market coverage depends on factors like market potential, market share, frequency of product purchase, technical knowledge required to sell the product and competition. The key members of a marketing channel are marketers, intermediaries, and end users. The term ‘marketer’ refers to the producer of the product or service. Marketers own the product till it reaches the next member in the distribution chain. Marketers use different intermediaries to reach their end users. These intermediaries execute different marketing and selling functions to increase the sales of the company in a designated area. Depending on their role in the distribution chain, intermediaries can be classified as distributors, wholesalers, retailers and agents. Distributors, wholesalers, and retailers differ from the agents as they own the title to the merchandise, while agents do not own the title and act as facilitating intermediaries. Examples of agents are carrying and forwarding agents (CFAs), advertising agencies, export agencies, insurance agents, etc.
The distributors and wholesalers plays a critical role in the distribution system. Most of the companies use wholesalers and distributors to reach their end customers through retailers. These wholesalers and distributors perform different functions like storage, delivery, credit and distribution to retailers. Retailing comprises of store as well as non-store retailing. Store retailers are brick-and-mortar retailers like neighborhood grocery stores, retail chains like Big Bazaar, Reliance Retail, Spencer’s, Tanishq, and so on. Non-store retailers include online retailers like Amazon, Flipkart, Snapdeal, and other retailers selling products through door-to-door sales, mailers, etc. A typical transaction in a marketing channel involves the flow of product from the company to the distributor to the retailer and finally to the customer i.e. Company—Distributor—Retailer—Customer. Money might flow in the reverse direction i.e. Customer—Retailer—Distributor— Company.
Source: Richard R. Still, Edward W. Cundliff, Normal A. P Govoni, Sandeep Puri (2017), Sales and Distribution Management: Decisions, Strategies, and Cases, Pearson; Sixth edition.