The products, which are used by industrial firms to produce other finished goods, are called industrial products. Raw materials, machines, equipment, management materials and production supplies etc. include in industrial products.
The channel structure used for consumer goods cannot be used for industrial goods. The channel for sale and distribution of such goods depends on type and nature of industrial goods, necessity, number of users, geographical distance etc.
In this channel the producers directly sell their products to industrial users without the help of intermediaries. Large quantity of industrial goods, big installations machines, costly equipment, raw materials and important machine parts re directly sold to the industrial users. As the number of customers of such goods remains low and such goods are used in certain geographical areas and are costly, their sales become easy and possible through zero level channel. Manufacturers of planes, big generators, ships, buses etc. produce the goods according to the order of the customers and contact directly to them. This channel is less costly and more effective in distribution of industrial goods.
Less costly office materials, equipment, operational supplies, construction materials, spares and parts etc. are sold through industrial distributors. In this channel, only one level intermediary remains between producers and users. The producers sell their products to industrial distributors and the industrial distributors sell them to industrial users.
The other channel to sell industrial goods is one level channel in which goods are sold to users through agents and not by industrial distributors.. The producers who need to remain busy in production cannot contact customers living in different places. So, they appoint agents for selling their goods. The agent bring goods from producer and sell them to industrial users. But the agents do not take tights and ownership of the goods. They get commission on the basis of quantity they sell. The service of agents becomes very important to bring new goods in market. They can identify potential customers and establish contact with them.
This is the longest channel for distribution of industrial goods. Two intermediaries i.e agent and industrial distributor remain between producer and users. Producer's agent contact industrial distributors and industrial distributors sell the goods to industrial users. This two level channel becomes useful to sell operating supplies, small spares and parts and other industrial goods that need massive distribution.
The channel structure used for consumer goods cannot be used for industrial goods. The channel for sale and distribution of such goods depends on type and nature of industrial goods, necessity, number of users, geographical distance etc.
The structure of distribution channel for industrial products can be mentioned as follows:
1. Zero Level Channel: (Producer.......Industrial User)
In this channel the producers directly sell their products to industrial users without the help of intermediaries. Large quantity of industrial goods, big installations machines, costly equipment, raw materials and important machine parts re directly sold to the industrial users. As the number of customers of such goods remains low and such goods are used in certain geographical areas and are costly, their sales become easy and possible through zero level channel. Manufacturers of planes, big generators, ships, buses etc. produce the goods according to the order of the customers and contact directly to them. This channel is less costly and more effective in distribution of industrial goods.
2. One Level Channel: ( Producer.......Industrial distributor........Industrial user)
Less costly office materials, equipment, operational supplies, construction materials, spares and parts etc. are sold through industrial distributors. In this channel, only one level intermediary remains between producers and users. The producers sell their products to industrial distributors and the industrial distributors sell them to industrial users.
3. One Level Channel: (Producer.......Agent........Industrial User)
The other channel to sell industrial goods is one level channel in which goods are sold to users through agents and not by industrial distributors.. The producers who need to remain busy in production cannot contact customers living in different places. So, they appoint agents for selling their goods. The agent bring goods from producer and sell them to industrial users. But the agents do not take tights and ownership of the goods. They get commission on the basis of quantity they sell. The service of agents becomes very important to bring new goods in market. They can identify potential customers and establish contact with them.
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4. Two Level Channel:(Producer......Agent.....Industrial distributor.....Industrial user)
This is the longest channel for distribution of industrial goods. Two intermediaries i.e agent and industrial distributor remain between producer and users. Producer's agent contact industrial distributors and industrial distributors sell the goods to industrial users. This two level channel becomes useful to sell operating supplies, small spares and parts and other industrial goods that need massive distribution.
