Channel of distribution

1. 3.CHANNELS OF DISTRIBUTION
PRESENTED BY- MR. AKSHAY M. KASAMBE
N.S.P.M COLLEGE OF PHARMACY DARWHA
Email Id- akshaykasambe@gmail.com
Contact no- 8237956745, 9172432197

2. INTRODUCTION
TYPES OF MIDDELMEN
WHOLESALERS
SERVICES PERFORMED BY WHOLESALERS
TYPES OF RETAILERS
MODERN TRENDS IN RETAILING
COMPARISON BETWEEN ‘WHOLESALERS’AND ‘RETAILERS’
RETAIL DEPARTMENTAL STORE
RETAILERS
MULTIPLE SHOPS OR CHAIN STORES
DIFFERENCE BETWEEN A DEPARTMENTAL STORES AND A MULTIPLE SHOPS
MAIL ORDER BUSINESS
CONSUMER COOPERATIVE STORES
HIRE-PURCHASE TRADING HOUSES
CONTENTS

3. •INTRODUCTION
Channels of distribution are the various outlets through which the product
moves from the factory into the hands of its consumer.
Distribution means the process of transferring the product from the
factory into the hands of its consumer.
The distribution channels are the various outlets through which product
move from manufactures to consumers.
There are different channels of distribution and the selection of an
appropriate one depends on the requirements of the manufacturer, the needs
of the consumer and the nature of product.
The distribution channels may be grouped under two major heads-
A. Direct selling
B. Indirect selling

4. DIRECT SELLING- When the manufacturer sells his goods directly to the consumer
There is no intermediary between them e.g.- Marketing of industrial products like heavy machinery and the
goods is sold through mail order.
INDIRECT SELLING- In this care, there are one or two middlemen or intermediaries are involved in
between the manufacturer and the consumer.
CHANNEL OF DISTRIBUTION

5. TYPES OF MIDDLEMEN
Brokers are those agents who
obtain neither the possession nor
the ownership of the goods and
their only function is to bring the
buyers and seller together.
They sell goods on behalf of
the seller .They negotiate the
sale of goods, take possession
of the goods and make
arrangement for the transfer of
the title to the goods.
In an auction the auctioneer
who has collected goods
from the sellers, displays it
for the would be buyers and
invites bids from them.
They find buyers for the
seller and also guarantee the
payment of the price of the
goods on their behalf
There are two types of middlemen-
A- FUNCTIONAL MIDDLEMEN B- MERCHANT MIDDLEMEN
BROKERS COMMISSION
AGENTS
AUCTIONEERS DEL CREDERE
AGENT
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FUNCTIONAL MIDDLEMEN
FUNCTIONAL MIDDLEMEN
The functional middleman are those intermediaries who perform various marketing functions
without having any title to goods i.e. they help in transfer of goods from the hands of the
producer to those of the consumers without acquiring any ownership rights.
MERCHANT MIDDLEMEN
They work for profit. They acquire and transfer the title to goods in their own name. The middlemen
covered under this category are-
Whole seller- They buy goods in large quantity from producer & sell them to retailers.
Retailers- They are the middlemen between wholesaler &consumer.

6. • WHOLESALERS
01
Manufacturer wholesalers- These wholesalers are engaged in manufacturing activities to some extent.
They may not only sell their own products to the retailers but may also make large-scale purchases
from other manufacturers to meet the demand of the retailers. In this way, they reduce their overhead
expenses by increasing their turnover.
02
Retailer wholesalers- These wholesalers purchase goods in bulk from the manufacturers and sell
them in retail to the consumers through their own shops. In this way they acts as wholesaler as well
as retailer.
03
Wholesaler proper- These wholesalers concentrate solely o buying and selling of goods in large
quintiles. They are also known as distributors.
Wholesalers are middlemen between the manufacturers and retailers. They buy goods and commodities in
large quantities from the producer and sell them to the retailers
The wholesaler dealing in pharmaceutical product requires a drug license from the health department of the
concerned state government.
The wholesaler sells the products to the chemists and physicians. A wholesaler is called ‘stockiest’ if he deals
in it deals in items manufactured by a single firm or company.
CLASSIFICATION OF WHOLESALERS

7. FUNCTION OF WHOLESALERS
A D D
T E X T
A D D
T E X T
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Assembling- They collects varieties of products from different manufacturers
Distribution- They distribute goods to the retailer who are widely scattered
Warehousing- They stores the goods of manufacturer for supply to retailer
Transportation- Wholesaler moves the good from the place of production
to his warehouse and from there to the retailer
Financing- He provides credit facility to the retailer
Risk bearing- In pharmaceuticals the wholesaler bear the risk of theft, fire ,fluctuating
prices breakage and expiry
Pricing- The wholesale prices and retail prices are fixed by the government
Grading and Packaging- The goods are graded and packed by the wholesaler as per
the requirement of the retailer
Market Research - The retailer passes the knowledge regarding the product from the
Customer to the wholesaler and in return the wholesaler passes this knowledge to the
manufacturer

8. SERVICES PERFORMED BY WHOLESALERS
*SERVICES TO RETAILERS*
The
wholesaler
purchases
goods from
various
producers
and stores
them at one
place for
retailers.
They help the
retailers by
supplying the
goods to them
promptly as
compared to
their getting
the supply
from the
manufacturers.
The
wholesaler
buys goods in
large
quantities
from the
manufacturers
and sells them
in small
quantities to
the retailers.
The
wholesalers
help in
stabilizing the
prices by
regulating the
supply of
goods and
enable the
retailers to
earn a fair
margin of
profit.
They inform
the retailers
regulating
new
products
introduced
into the
market.
The wholesaler
usually obtains
substantial
discounts and
rebates from the
producers and
are therefore in
a position to
give special
discounts to the
retailers on bulk
purchases
The wholesaler
deals in a
limited number
of products and
there fore gains
expert
knowledge in
his field of
specialty. The
retailer can also
be benefited
from the
specialization
achieved by the
wholesaler
They provide
credit facilities
to retailers.
They bear
most of the
risks
connected
with
marketing
and thus
save the
retailers
from such
risks (e.g.-
goods may
be damaged,
destroyed or
stolen)
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9. SERVICES TO PRODUCERS OR MANUFACTURERS
01
They buy goods
in bulk form
producers and
relive the
producers of
the botheration
of collecting
orders and
supplying
goods to widely
scattered
retailers
02
The
wholesaler
trader helps in
large scale
production of
goods by
giving supply
order for a
bulk quantity
03
They usually
make cash
payment for the
goods purchased
from producers.
Thus, the capital
invested by
producers does
not remain
blocked for long
which in turn
results in quick
turnover.
04
The
wholesaler
trader
maintains a
sufficient
stock of goods
at all times
during the year
and thus, in a
way, provides
warehousing
facilities to
both producers
and retailers
05
They provide
market
information to
the
manufacturers
so that they
can regulate
their
production
accordingly.
06
The
wholesalers
help the
manufacturer
in
maintaining a
uniform rate
of production
by placing
advance
supply orders.

10. SERVICES TO THE SOCIETY [CONSUMERS]
The wholesalers
sell the goods to
the retailers at
uniform prices
which helps in
bringing
uniformity in
price of retailers
Wholesalers
purchase large
quantity of goods
from producers
which helps to cut
down the cost of
production.
Therefore,
consumers are
able to purchase
the goods at
reasonable price
Wholesalers
informed about
the taste of
consumers to the
producers with
the result
consumers are
able to purchase
goods of their
liking
Wholesalers
help in
maintaining a
balance in
demand and
supply and helps
to stabilize the
prices
Wholesalers
conduct market
research from time
to time. This help
in the
improvement in
the existing
product.
Consumers get
better quality
products at
reasonable price

11. ELIMINATION OF WHOLESALERS
There is common feeling that the services of wholesalers are
unnecessary in present age.
They should be eliminated because middlemen are parasites
growing fat at the cost of producers and consumers.
But on the other hand it is felt, that, in the absence of wholesalers,
the producers, retailers and consumers may have to face a lot of
problems.
It is desirable to study the views and arguments for and against the
wholesalers in order to come to any conclusion

12. ARGUMENTS FOR THE ELEMINATION OF WHOLESALERS
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The producer can sell their products to
consumers through advertisement
without the help of wholesalers.
The producer pays commission to the
wholesalers which increase the retail
price of goods. So the existence of
wholesalers leads to increase in prices.
Certain producers have started opening
their own retail outlets at various places
for direct selling to consumers at
reasonable prices e. g . Dabur , Hamdard
etc.
Wholesalers are only interested in the
sale of popular products. Therefore new
products are not available with the
wholesalers.
Nowadays, the departmental stores and
large scale retail shops are getting
popularity in big cities. Such types of
establishment make direct purchase from
producers.
Due to fast means of transport, the retailers
can easily buy required quantity of goods
from producers directly.
Sometimes wholesalers create the scarcity in
the market by hoarding the products. Due to
shortage of supply, the prices get increased in
the market. Thus wholesalers exploit the
consumers by charging very high prices.
Cooperative societies are increasing day by day.
These societies earn less rate of profit and sell
better quality goods at reasonable price by
purchasing directly from producers.
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13. ARGUMENTS AGAINST THE ELEMINATION OF WHILESALERS
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Wholesalers
provides
various
services to
the retailers
regarding
marketing of
goods which
may not be
possible for
the retailers
to perform it
If Wholesalers
are eliminated,
the retailers will
not be able to
purchase goods
on credit.
Similarly,
producers will
not be able to get
advances from
wholesalers.
Hence both
producers as well
as retailers will
have to face
financial
difficulties
Producers
produce goods
for future
consumption,
but it is not
possible for
them to estimate
the demand in
future. This
information is
supplied by
wholesalers,
because they
have a well knit
network of
retailers
Wholesalers
provides free
shop delivery
facility to the
retailers which
may not be
possible in the
absence of
wholesalers
Wholesalers
provide
market
information to
the producer
which may not
be available to
them in the
absence of
wholesalers.
If wholesalers
are eliminated,
the more
capital is
required by
the producers
in order to
provide credit
facilities to the
retailers.
In the absence
of wholesalers
the retailers
would
purchase
goods in small
quantity from
producers.
This will lead
to increase in
expenses on
packing and
transport etc.

14. RETAILERS
Wide choice to consumers- He keeps a
stock of various items according to the need
of the consumers.
Ready stock - He keeps ready stock of all
goods so that he is able to meet demand of
customers at all times.
Transportation- Retailer make their own
arrangements for transportation of products
of different kind from wholesaler’s godown.
Grading- Retailer does grading of those
goods which have been left ungraded by the
manufacturers and wholesalers.
Risk bearing- Retailers bears a risk of loss
of goods by fire, theft or deterioration as
long as they are not sold
Sales promotion- They display the goods in show
windows & the counter for information of customers
thus retailer promotes the sale of goods.
Market research- The retailer passes the knowledge
regarding the product from the Customer to the
wholesaler and in return the wholesaler passes this
knowledge to the manufacturer.
Financing-They provide financial help to
consumers by selling them the goods on credit.
Retailer is a middlemen between wholesaler and actual consumers.
The retailer sells the goods to the consumers and maintains an intimate
contact with the wholesalers, manufacturers and consumers.
They are an important link between the manufacturers and consumers.
FUNCTIONS OF RETAILERS
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15. SERVICES PERFORMED BY RETAILERS
Retailer studies the tastes, likes and dislikes of the customers and through the wholesaler,
communicates it to the manufacturer to enable him to improve his products accordingly01
They help the wholesaler and manufacturer by doing the job of advertisement by
displaying goods in show windows or on counter or by any other means03
The retailer helps the manufacturers and wholesalers in meeting the various requirements of
consumers living in every nook and corner of the country03
The retailer renders a number of services to the producers/ wholesalers and customers,
because retailer is a middlemen between a wholesaler and actual consumer
SERVICES TO THE PRODUCER/ WHOLESALER

16. SERVICES TO THE CONSUMERS
They maintain a ready stock of goods
to meet the demand of consumers.
They provide free home delivery
service to the consumers
A retailer displays the new products in show
window and on counter for the information of
the would be consumers.
They provide credit facilities to consumers
The retailer offers free expert advice to his
customers about the merits and uses of each
product and also about the availability of a
better substitute
They maintain a regular contact with the
customers so as to provide an opportunity to
them to make a complaint regarding a
substandard product, replacement of
defective product etc.
The retailers keep themselves well-stocked
with different verities of goods manufactured
by different producers. In this way, they
provide an opportunity to the customer to
choose the best out of available products
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17. • TYPES OF RETAILERS
They move from door to door
in residential localities to sell
their goods.
Hawkers and pedlars
These traders arrange their
goods at busy street corners
or pavements of busy roads,
railway stations, temples etc
Street traders
They keep on moving from
place to place to sell their
goods at weekly, fortnightly
or monthly bazaars.
Market traders
01 02 03
They are two types of retailers
1. Itinerant retailers
2. Fixed shop retailers
Itinerant retailers- These retailers do not operate from fixed premises but move
from place to place for selling goods in small lots to the consumers. They work
with very small capital investment and mainly deal in low priced commodities of
daily use. The following are the various types of itinerant retailers.

18. • Fixed shop retailers- The fixed shop retailers set up permanent establishment to sell their goods. They do not go from
place to place in search of their customers. In fact it is the customers who visit the hop to get their requirements. The
fixed shop retailers may be divided into two subgroups
1. Small-scale retail shop 2. Large-scale retail shop
Second hand
goods shops
General stores
Single line stores
Specialty Stores
These stalls are located in the main streets or street crossings. A stall is an improvised structure made of
tin or wood. The street stall holder displays his goods on a temporary platform and sells toys, stationery,
hosiery items, etc. at low prices
These shops sell used or second hand articles such as books, clothes, furniture, etc. They cater to the
needs of poor people who cannot afford new articles. These shops collect goods at private and public
auctions.
These stores sell a wide variety of products under one roof. For example, a provision store deals in
grocery, bread, butter, toothpaste, razor blades, bathing soap, washing powder, soft drinks, confectionery,
cosmetics, etc. Consumers can buy most of their daily requirements at one place.
These shops generally specialize in one type of product rather than dealing in a line of products.
Shops selling children’s garments, educational books, etc.
Street stalls
These stores deal in one line of goods. They keep stock of different size, design and quality of goods
in the same line. Book stores, chemist shops, electrical stores, shoe stores, cloth stores, jeweler shops,
etc., are examples of single line stores
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Small-scale retail shop

19. • Large-scale retail shop- They deal in all kinds of goods essential as well as luxury goods, cheap as well as expensive, The
capital investment of such retailers are relatively large as compared to small scale shops. For example, departmental stores,
Multiple shops or chain stores, mail order business, consumer cooperative societies etc.
MODERN TRENDS IN RETAILING
Nowadays, retailing techniques have undergone tremendous change. The following changes are done in retail trade to attract
the customers.
Self service is being stressed because it is quicker, beneficial to customers and saves time and cost on customers. Self
service is not possible in retail pharmacy.
Goods are generally pre-packed by manufactures in order to avoid the cheating of customers regarding their weight and
quality . For example tablets and capsules are available in the market in aluminum foils (Strip packing ).
Many manufacturers give name to their product (proprietary medicines ) or a trade mark to distinguish them from other
similar products available in the market.
The manufacturers have made the provision of after sales service for consumer durable items, in order to compete with
other firms.
Hire purchase system has been followed in order to increase the sale of luxury and consumer durable items. Many retail
shops have made arrangement with financial institutions which buy their products in cash ad deal with their customers
directly.
New shopping complexes are coming up in newly developed residential colonies. Each shopping complex has large
number of independent retail shops.
Vending machines have been installed by retailers. These are operated with coins with nominal assistance of one helper.
This saves times of retailers in handling goods.

20. Differentiation between wholesaler &retailer
SR.NO RETAILER WHOLESALER
1 Middlemen bet wholesaler & consumer Middlemen bet manufacturer& retailer
2 Deals in small scale business Deals in large scale business
3 Sells goods for consumption. Sells goods for resale
4 Location is very imp Location of shop is not imp
5 Window display is imp. Window display of goods not imp
6 Deals in large no of products of diff. Mfg. Deals in specific type of product
7 Provides after sale service Do not provide after sale service
8 Sells at higher margin of profit Sells goods at low margin of profit since the
turnover of sale is high.

21. • RETAIL DEPARTEMENTAL STORE
ADVANTAGES
Convenience- It provide great convenience in shopping because customers can get all their requirements
from one place.
Wide variety of goods- It keeps a large variety of goods, thus offering a good choice
to customers, when they buy the required goods.
Located at central place- Departmental stores are located at central part of the
city. So it is convenient for all types of consumers to visit it.
Economies of large‐ scale operations- It buys its requirements in large quantities
which reduces its cost and increases theprofit.
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It is a large scale retail organization comprising a number of departments each dealing in a separate line of product and work
under one roof and one management. It deals in a wide range of products. The main object of it is to satisfy consumer needs
at one place to save botheration to consumers
Cost per unit is low- Due to huge sale in departmental stores the selling cost per unit
becomes very low.
Provide extra service- It provides telephone facilities, recreation facilities and free home
delivery facility to its customers.
Customer satisfaction- It can afford to employ competent sales persons to attend to its customers. This
leads to efficiency and increased customer satisfaction.

22. No personal contact with customers- The
sales are controlled by employees, so the
owner of the departmental store cannot
establish personal contact with his
customers.
No coordination between two
departments- since each department in a
store works independently or there may
not be any personal contact or coordination
between the various dept. in a
departmental store.
Located at central place- Departmental stores
are located at central part of the city. People
living at a distant place find it difficult to visit
the departmental store.
Initial cost is high- The initial cost
of running a departmental store is
relatively very high.
High Overhead expenses - comparatively high overhead expenses
because extra facilities are provided to attract customers
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DISADVANTAGES

23. MULTIPLE SHOPS OR CHAIN STORES
Multiple shop or chain stores are the groups of shops in the same branch of retail trade.
The main objective is to provide shopping facilities near the residence of the would be customers.
Each branch deals in a similar line of goods.
Each multiple shop system has a head office whose decisions are passed on to all its branches.
The price of all the items is fixed by the head office and the same is charged at every branch.
The supply of items to various branches is made direct from head office.

24. 02
Multiple shops are located in important
localities of the city for the convenience of
the customers which increases sale.
04
The shortage of supplies at one branch can
easily be met by transfer from another
branch having a surplus stock.
06
There is a direct contact between
producer and customer, so the
middlemen’s profit are Eliminated.
03
The fixed price and standard quality of goods
helps in winning the confidence of the
customers.
05
There is uniformity of window display and
shop decoration in all the branches of
multiple shops which makes an easy
identification of them.
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In multiple shops sales are made strictly on
cash payment. So there is practically no loss
due to bad debts.
Central head office does the purchasing for all
the branches which results in bulk buying
which reduces the cost of the product.
ADVANTAGES
08
Multiple shops are run under the control of head
office which follows uniform policies in regard to
all important matters. This makes it easy for the
head office to exercise effective control and
supervision of its branches.

25. • DISADVANTAGES
Multiple shops deal in a limited
range of products. So the customers
do not have a wide choice.
The owner of multiple shops cannot
make personal contacts with his
customers.
The staffs at multiple shops have
little freedom to make its own
decisions sometimes it adversely
affect the sales.
The head office of multiple shops is
generally located at a faraway place,
so there is generally no effective
control on the staff working in its
branches.
There is no provision for any
facilities to its customers.
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The success of the organization
depends upon the branch managers.

26. Distinction between DEPARMENTAL STORE AND A MULTIPLE SHOPS
SR.NO DEPARTMENTAL STORE MULTIPLE SHOPS
1 Wide variety of products are available Particular type of product are available
2 No uniform pricing system. Uniform pricing in all the branches
3 Control over the activity is easier. Control is difficult
4 No uniformity in decoration uniformity in decoration
5 They provide no. Of services & amenities. No other services to the customer
6 Sell of goods in cash & credit Sell is only on cash basis
7 Stores mainly for rich people For general public

27. MAIL ORDDER BUSINESS
It is a type of retail trade in which all business activities take place thro’ mail or post.
If you want to buy some durable items it is not always necessary that you go to a fixed shop and get the goods
from the seller.
An advertisement in the newspaper attracts the attention of a person to certain goods. He fills up the coupon and
sends it to the seller.
The seller receives orders and packs the goods. The seller sends the goods through the post office. The buyer
receives the goods from the postman by paying the required amount. The seller later collects the money from the
post office.
This is a system of sale by post and is known as Mail Order Business. It is also called shopping by post.
It is a method of selling goods by producers or traders directly to the customers through post office.
The seller advertises the products through newspapers, magazines, television, booklets, catalogues etc.
To make the customer aware about the product. The advertisement contains detailed particulars about the goods
and is designed in an attractive way to create an interest in the mind of the customers to buy it.
The advertisement may contain an order form or coupon, which the customer has to fill up and send at the
address of the mail order house.
After receiving the order, the mail order house packs the goods properly and sends them through the post office

28. TYPES OF MAIL ORDER BUSINESS
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There are three main types of mail order business
1. Manufacturer mail order house
2. Departmental mail order business
3. Middlemen mail order business
Manufacturer mail order house- These are established by the manufacturers for
selling the goods manufactured by them directly to consumers, thus eliminating the
middlemen.
Departmental mail order business This is only a department of a departmental store executing
orders received from outside.
Middlemen mail order business In this case the business house is not engaged in production or
wholesale selling but concerned only with the sale of goods by mail. It purchases the required
goods, partly on the receipt of orders and partly in anticipation of orders, from the wholesalers
and dispatches the same by mail to the consumers.

29. ADVANTAGES OF MAIL ORDER BUSINESS
Requires a low capital
There is no danger of bad
debts, since the price of goods
is received either in advance or
collected from post office when
goods are sent by V.P.P.
The seller gets a very wide
market to sell his products.
It does not require a shop
to start a business.
It is very useful for those
customers who live in
remote areas of the country.
There is a direct link between
manufacturer and customers.
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30. • DISADVANTAGES
The credit facility is not available to
the customers.
There is a risk of damage of goods
during transportation.
There is a lack of personal contact
between manufacturer and customers so it
is difficult to make permanent customers.
There are the chances of cheating
by dishonest trader.
The illiterate customers cannot use
this facility.
A large amount of money is spent on
advertisement, correspondence, packing
of goods which increases the overhead
expenses and hence the price of goods.
A buyer can not examine the goods
before its purchase.
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31. CONSUMERS COOPERATIVE STORES
In this system, the customers themselves form a society and run the retail business.
The basic purpose is to eliminate middlemen.
 The capital required for running a cooperative store is subscribed by the members through the purchase of
shares of small denominations.
Thus even poor consumers can become members of such societies.
The consumers cooperative store is subscribed by the members through the purchase of shares of small
denominations.
Thus even poor consumers can become members of such societies.
The consumers cooperative stores purchase their requirements in bulk from the wholesalers at wholesale rates
and sell them to their members at the market rate.
A part of profit earned in the business is passed on to the members in the form of bonus on purchases.
Besides the bonus, the members holding shares in the capital of the society get a dividend on their shares.
These stores are usually managed by honorary members but sometimes sales managers may also be appointed.

32. • ADVANTAGES
It promotes thrift
among members
and increase their
economic security
The consumers have
complete control
over the society
running the store.
Thus the genuine
needs of the majority
of the consumers will
be promptly met by
such stores.
The overhead
expenses are
reduced because
unnecessary
expenditure on
advertisement and
decoration of store is
not required
The consumers get
better quality goods
at lower price as
middlemen’s profits
are eliminated
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04

33. • DISADVANTAGES
03
Generally speaking, there is much to be desired as regards the loyalty
of the members
02
These stores generally have meagre resources, thus these
stores cannot run on a large scale
01
There is a lack of ability, experience and
business training on the part of honorary
members, who are running the stores
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03

34. HIRE-PURCHASE TRADING HOUSE
In this system buyer initially pays a part of the purchase price of goods and the rest of the price is paid in
equal periodical installments.
The ownership of the goods continues to be with the seller and transferred to the buyer only, when he has
paid the final installment of the price of goods.
In case of default, the seller is free to take back the goods from the buyer. Furthermore the installments
already paid by the buyer are forfeited as hire- charges for the goods.
In this system the sale does not take place until the last installment for the goods has been paid.

35. Salient features of hire-purchase trading house
Buyer gets credit
from the seller
against the security
of lien on the goods
purchased by him
A Part payment is
made at the time of
purchase and rest
in installments.
The buyer
becomes the
owner of the goods
only after the
payment of final
installment of the
total price.
The seller is free to
carry back the
goods if the
purchaser does not
pay the installment.
The installments
already paid by the
buyer are forfeited
and these are treated
as hire charges for
the goods.
These installments
always include
interest as the seller
has to wait for
sometime till the
full price is
received.
01 02 03 04 05

36. • ADVANTAGES
This system provides facility
to purchase costly goods to
middle class people on easy
installments.
his system helps to increase the
sale of costly and non-essential
items as it tempts large number
of people to buy the same. Even the people who have
sufficient money will go for this
system as they can invest their
money elsewhere to earn more
profit
The Small scale manufacturer can
buy their machinery and tools
without making total payment.
01
02
03
03

37. • DISADVANTAGES
People are tempted to buy things
which they cannot afford.
The goods purchased on hire purchase
scheme are costlier as they have to pay
the interest on unpaid installment.
Trader dealing in hire purchase scheme h
ave to arrange for large capital to finance
their business
01
02
03

38. ADVANTAGES AND DISADVANTAGES OF CHANNELS OF DISTRIBUTION
ADVANTAGES
1. The cost of marketing is reduced by channels of distribution.
2. The goods are easily available at all places.
3. The sale of goods increases due to support of wholesaler and retailers.
4. The goods are available at similar prices throughout the area.
5. The financial burden and employment problems are removed for producer.
DISADVANTAGES
1. Wholesaler, retailer and other agent’s commission increases the price of goods.
2. Sometime they do not supply goods in time.
3. They may create artificial scarcity by holding goods supply

39. “The Pessimist Sees
Difficulty In Every
Opportunity. The Optimist
Sees Opportunity In Every
Difficulty.”