the manufacturer to the customer. It is also termed as ‘zero-level channel’.

Producer → Customer (Zero-level Channel)

The producer sells the goods or provides the service directly to the consumer with no
involvement with a middle man such as an intermediary, a wholesaler, a retailer, an agent, or
a reseller. The consumer goes directly to the producer to buy the product without going through
any other channel. This type of marketing is most beneficial to farmers who can set the prices of
their products without having to go through the Canadian Federation of Agriculture.
Indirect Marketing Channels
In this channel of distribution, the goods produced by manufacturing units passes through
different intermediaries to reach its final consumer.

The indirect channels can be further classified into the following types, each of which is
supported by an example:

Producer → Retailer → Consumer (One-level Channel)

Retailers, like Walmart and Target, buy the product from the manufacture and sell them directly
to the consumer. This channel works best for manufacturers that produce shopping goods
like, clothes, shoes, furniture, tableware, and toys. Since consumers need more time with these
items before they decide to purchase them, it is in the best interest of the manufacturer to sell
them to another user before it gets into the hand of the consumers. It is also a good strategy to
use another dealer to get the product to the end-user if the producer needs to get to the market
more quickly by using an established network that already has brand loyalty. In accordance with
the form of the retail property, operators can be an independent company, owned by a different
owner or to engage in the retail network.
Producer → Wholesaler → Retailer → Customer (Two-level Channel)
Wholesalers, like Costco, buy the products from the manufacture and sell them to the consumer.
In this channel, consumers can buy products directly from the wholesaler in bulk. By buying the
items in bulk from the wholesaler the prices of the product are reduced. This is because the
wholesaler takes away extra costs, such as service costs or sales force costs, that customers
usually pay when buying from retail; making the price much cheaper for the consumer.
However, the wholesaler does not always sell directly to the consumer. Sometimes the
wholesaler will go through a retailer before the product gets into the hands of the consumer.
Producer → Agent/Broker → Wholesaler or Retailer → Customer (Three-level Channel)
This distribution channel involves more than one intermediary before the product gets into the
hands of the consumer. This middleman, known as the agent, assists with the negotiation
between the manufacturer and the seller. Agents come into play when the producers need to get
their product into the market as quickly as possible. This happens mostly when the item
is perishable and has to get to the market fresh before it starts to rot. At times, the agent will
directly go to the retailer with the goods, or take an alternate route through the wholesaler who
will go to a retailer and then finally to the consumer.
Key Terminology
 Manufacturer: The company or industry or the production unit where the goods are
produced on a small scale or large scale for selling in the market, is known as a
manufacturer.
 Customer: The person who intends to buy a product or service and is capable of doing so,
is termed as a customer.
 Wholesaler: The one who buys goods directly from the manufacturer in large quantity with
the intention to sell it to the retailer, to earn a marginal profit is called a wholesaler.
 Retailer: The person who sells goods in small quantity, directly to the customers at the
maximum retail price (MRP) is known as a retailer.
 Agent: The one who distributes goods from the manufacturers to the various wholesalers
and earns commission over it is called as an agent