This arrangement tends to work best where the retail channel is fragmented - i.e.
not dominated by a small number of large, powerful retailers who have an incentive to cut out the wholesaler. The consumer electrical goods market in the UK is typical of this arrangement whereby producers such as Sony, Panasonic, Canon etc.
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Distribution channels for goods are characterized by the number of levels that make up them.
A good example of this channel arrangement in the UK is the distribution of drugs. sell their goods directly to large retailers and e-tailers such as Comet, Tesco and Amazon which then sell onto the final consumers.
Channel 3 is called a "direct-marketing" channel, since it has no intermediary levels.You can also follow @tutor2u Business on Twitter, subscribe to our You Tube channel, or join our popular Facebook Groups.Much cheaper & more effective than TES or the Guardian.The figure below shows some examples of channel levels for consumer marketing channels: In the figure above, the first two channels are "indirect-marketing channels".Channel 1 contains two intermediary levels - a wholesaler and a retailer.Here is a summary: Nature of the product Perishable/fragile? Complex products are often sold by specialist distributors or agents Customised?A direct distribution approach often works best for a product that the end consumer wants providing to a distinct specification Type of product – e.g. Marketing objectives – revenue or profit maximisation?For example, food distribution channels in Japan have up to six levels (intermediaries).In the consumer market, there used to be such distribution systems in which everyone focused only on their own interests, without regard for the interests of others.A distribution channel can also be very complicated, with several levels.Each layer of marketing intermediaries that performs some work in bringing the product to its final buyer is a "channel level".