Let’s examine the roles of key
players in the distribution channel:
Producer:
Producers oversees the
making of a product.
For example, a film
producer, music producer, agricultural producer (farmer),
radio producer, television producer, theatrical producer,
game producer, etc.
The term Producer is
synomous with Manufacturer.
Manufacturer:
A Manufacturer produce
goods for use or sale utilizing labor, machinery, tools and
raw materials.
A Manufacturer transforms
raw materials into finished goods.
Manufacturers can make
finished goods that are ready for consumer use or they can
make items that can be used in other manufacturing
processes.
Automobile manufacturers
are examples of Manufacturers that assemble manufacturered
items to produce a finished product (automobiles).
Note:
some manufacturers also
perform the role of Wholesaler.
Resellers: (aslo known as Value Added Reseller
(VAR)).
Resellers purchase goods
or services with the intent of reselling them for a profit.
They normally enhance the
value of the product by including complementary products or
services as part of a packaged deal.
An example of this would
be a computer store that buys software and hardware from a
producer/manufacturer and turn around and sell that software
and hardware along with other services.
Distributors: (also known as Distributors or
Wholesalers, Suppliers or Wholesale Merchants).
Distributors provides the
link between the producer/manufacturer and the retail
outlets.
Distributors obtain new or
used goods from producers/manufacturers (by providing them
advance payments), assemble, sort, grade, breakdown, repack
and redistribute them to their retail customers,
institutional buyers or to other wholesalers.
Distributors do not sell
to standard consumers.
Distributors generally do
not charge sales tax.
Distributors not only
re-package items to fit their retail customers
specifications, they also transport and deliver the items to
their customers specified locations.
They also partake in
advertising campaigns to boost the demand for goods.
Higher demand means they
can sell more products and charge a higher price.
This also benefits the
producer/manufacterer because it costs them nothing for the
added publicity.
Wholesalers quite often
pre-order products form producers/manufacturers.
Many retail chains will
not work with producers/manufacturers to get items in their
stores.
They will only work with
their authorized Distributors to get items on their shelves.
Unless the producer/manufacturer
is also serving as a Distributor.
Producers/manufacturers often provide additional services
such as distribution.
Agents: (also known as a Business Agent).
Agents take on the
responsibility of handling another’s business affairs.
The exact duties an Agent
performs depends on the requirements of his/her clients.
Some duties performed by
an Agent may include negotiating contracts, finding buyers
or sellers, etc.
Agents
are predominantly used in the sports industry and the movie
industry.
Brokers:
A Broker is an independent
agent that facilitates transactions between buyers and
sellers for a commission.
A Broker may represent the
seller or the buyer but not both at the same time.
Some industries rely more
on the use of Brokers than others.
Real estate and the
Import/Export industry are examples of industries that rely
heavily on the use of Brokers.
A great benefit of using
Brokers is the knowledge and expertise they may have about
the industry and the low cost service that they provide.
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