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Channels for Industrial Goods

A channel for industrial goods is a set of interdependent organizations in the process of making products/services available for use.

Learning Objective

  • Outline the various channels used for industrial goods


Key Points

    • Producer to industrial user. This is a direct channel for industrial users commonly employed by manufacturers of large installations like generators.
    • Producer to industrial distributor to industrial user. This channel of distribution is commonly used to market accessory equipment, such as typewriters or operating supplies that include typewriting papers, pens, and office materials.
    • Producer to agent to industrial user. This is preferably used when an industrial product is new in the market.
    • Producer to agent to industrial distributor to industrial user. This trade channel is feasible when agents cannot directly sell to industrial users.

Terms

  • marketing channel

    This is sets of interdependent organizations involved in the process of making a product or service available for use or consumption, as well as providing a payment mechanism for the provider.

  • channel of distribution

    the institutional arrangement by which goods or services are conveyed from producer to user


Full Text

Channels for Industrial Goods

With the growth of specialization, particularly industrial specialization, and with improvements in methods of transportation and communication, channels of distribution became very complex. Thus, corn grown in Illinois may be processed into corn chips in West Texas, which are then distributed throughout the United States. Turkeys grown in Virginia may be sent to New York so that they can be shipped to supermarkets in Virginia. A marketing channel is the network of organizations that work together to provide goods for consumption.

This definition implies several important characteristics of the channel. First, the channel consists of institutions, some under the control of the producer and some outside the producer's control. Yet all must be recognized, selected, and integrated into an efficient channel arrangement. Second, the channel management process is continuous and requires constant, monitoring and reappraisal. The channel operates 24 hours a day and exists in an environment where change is the norm.

Channels for Industrial Goods include:

  1. Producer to industrial user. This is a direct channel for industrial users, commonly employed by manufacturers of large installations, such as generators.
  2. Producer to industrial distributor to industrial user. This channel of distribution is commonly used to market accessory equipment, such as typewriters or operating supplies which include typewriting papers, pens, and office materials.
  3. Producer to agent to industrial user. This is preferably used when an industrial product is new in the market. Agents are middlemen who have market contacts and can provide sufficient information on possible markets.
  4. Producer to agent to industrial distributor to industrial user. This trade channel is feasible when agents cannot directly sell to industrial users. Since these agents or brokers shall render services only on demand, a regular, fixed income can be minimized instead; commissions may be given as they render services during season.
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