Types of channels
Functions of Distribution Channels
“A distribution channel is a chain or set of
intermediaries through which a good or service
passes until it reaches the end customer”.
Producer Intermediaries Customer
Types Of Distribution Channels
channel Zero- level
Direct Distribution Channel:- This type of channel does not
have any market intermediaries, the goods go from the producer
direct to the customer.
This is also known as ‘zero-level’ distribution channel.
Indirect Distribution channels:- In this type of channel
there are intermediaries and the product directly does not go to
the customer. These further can be classified as in the following
One- level Distribution Channel
Two- level Distribution Channel
Three- level Distribution Channel
Four- level Distribution Channel
One- level Channel: There is only one intermediary between
the producer and consumer. The intermediary can be a retailer or
Example: tata sells its cars only to its authorized retailers,
expensive watche, etc.
Two- level Channel: This type of channel has two
intermediaries, namely wholesaler/distributor and retailer.
Three- level Channel: This type of channel has three
intermediaries,namely, distributor, wholesaler and retailer.
Producer Distributor Wholesaler
Four- level Channel: This type of channel has four
intermediaries and is used for consumer durable products also.
Producer Agent Distributor
• The people and organizations that assist in the flow of goods
and services from producer to customer are known as ‘market
intermediaries’. There are some common types of
Agent or broker
It refers to just about anybody acting as an
intermediaries between the producer and the customer.
• Intermediaries with legal authority to
market goods and services and to perform other functions on
behalf of the producer.
These are the intermediaries that primarily buy
in bulk from the producer and then sell to the retailers and
This is the last link in many distribution
channels, retailers sell directly to the final customer.
They purchase goods from wholesaler or in some cases
directly from the producer.
Agent or Broker
These intermediaries buy basic product from the
producer and value to it or modify it and then resell it to the
These are the intermediaries that assume the
ownership of the goods they sell to customers and other
It is the intermediary that buys goods from the
producer and warehouses them and resells them to further
intermediaries and customers.