Tamilnadu State Board New Syllabus Samacheer Kalvi 11th Commerce Guide Pdf Chapter 23 Channels of Distribution Text Book Back Questions and Answers, Notes.
Tamilnadu Samacheer Kalvi 11th Commerce Solutions Chapter 23 Channels of Distribution
Tamilnadu Samacheer Kalvi 11th Commerce Solutions Chapter 23 Channels of Distribution
I. Choose the Correct Answer
Trade middleman who acts as a link between wholesaler and customers refers to a ………………
Who is the first middleman in the channel of distribution?
………………. buy the goods from the producer and sell it to the retailers.
……………….. are agents who merely bring the buyer and the seller into contact.
b. Commission agent
c. Selling agent
Merchant middlemen can be classified into …………………… categories.
Wholesalers deal in ………………. quantity of goods.
A …………………….. is a mercantile agent to whom goods are entrusted for sale by a principal and takes physical possession of the goods but does not obtain ownership.
d. Commission agent
II.Very Short Answer Questions
Who is a middleman?
The term ‘Middlemen’ refers to all those who are in the link between the primary producer and the ultimate consumer in the exchange of goods or services.
According to Cundiff and still “Wholesaler buys from the producer and sell merchandise to the retailers and other merchants and not to the – consumers”.
According to S. Evelyn Thomas, “the retailer is the last of the many links in the economic chain whereby the consumer’s wants are satisfied smoothly and efficiently by retailers”.
Who is a broker?
A Broker is one who bargains for another and receives a commission for his service. He is paid ‘brokerage’ for his services.
What are the classifications of the merchant middlemen?
Merchant middleman can be further subdivided into:
Who are the mercantile agents?
A businessman appoints a person to buy and sell goods on his behalf and gives him the right to borrow money on the security of goods. He is known as a mercantile agent.
III. Short Answer Questions
What do you understand by channels of distribution?
A channel is a route through which the goods are passed on to the ultimate consumer. There are direct channels or routes of distribution without middlemen. The indirect channel consists of one or more middlemen performing different functions. Middlemen help in the flow of goods towards the lakhs of crores of consumers.
Who is a factor?
A factor is a mercantile agent to whom goods are entrusted for sale by a principal. He takes physical possession of the goods, though he does not obtain ownership of the goods. A factor sells goods in his own name without revealing the name of his principal. He can sue or be sued for his contracts. He has a right of lien on goods in his possession for his unpaid charges.
Explain the types of mercantile agents.
Kinds of Mercantile Agents or Agent Middlemen:
- Commission Agents
- Del – credere Agents
- Warehouse keepers.
Explain any three characteristics of wholesalers.
- Wholesalers buy goods directly from producers or manufacturers.
- Wholesalers buy goods in large quantities and sell in relatively smaller quantities.
- Wholesalers sell different varieties of a particular variety of products.
What are the services rendered by the wholesalers to the manufacturers?
Services to Producers or Manufacturers:
- Economies in Large Scale
- Assistance in Distribution
- Warehousing Facility
- Forecasting of Demand
- Publicity of Goods
- Financial Assistance
- Risk – bearer
IV. Long Answer Questions
What are the characteristics of retailers?
A trading intermediary engaged in the distribution of goods to the ultimate consumer is known as retailer. Following are the characteristics of retail traders ® Retailer generally involves dealing in a variety of items. A retailer makes purchases from producers or wholesalers in bulk for sale to the end consumers in small quantities.
- Retail trade is normally carried on in or near the main market area.
- Generally, retailers involve buying on credit from wholesalers and selling for cash to consumers.
- A retailer has indirect relation with the manufacturer (through wholesalers) but a direct link with the consumers.
What are the functions of Wholesalers?
Following are the functions of wholesalers:
- Collection of Goods: Wholesaler collects the goods from manufacturers or producers in bulk.
- Storage of Goods: Wholesaler collects and stores them safely in warehouses, till they are sold out.
- Distribution: Wholesaler sells goods to different retailers. Thus he performs the function of the distribution.
- Financing: Wholesalers provide financial support to producers and manufacturers by providing money in advance to them.
- Risk Taking: Wholesaler buys finished goods from the producer and keeps them in the warehouses till the time they are sold and assumes the risk arising from price, spoilage of goods, and changes in demand.
- Grading Packing and Packaging: Wholesaler classifies the goods into different categories.
- Providing Information: Wholesalers provide valuable information to retailers and producers.
- Transportation: A wholesaler arranges for the transport of goods from producers to his warehouse and from the warehouse to retailer.
What are the functions of Retailers?
The following are the functions of retailers.
Functions of Retailers:
A retailer buys a wide, variety of goods from different wholesalers after estimating customer’s demand. He selects the best merchandise from each wholesaler and brings all the goods under one roof. So, he performs the twin functions of buying and assembling goods.
A retailer maintains a ready stock of goods and displays them in the shop.
The retailer sells the goods in small quantities according to the demand taste and preference of consumers. He employs efficient methods of selling to increase his sales turnover.
Grading and Packing:
The retailer grades the goods which are not graded by manufacturers and wholesalers. He packs goods in small lots for the convenience of consumers
A retailer always keeps stock of goods in anticipation of demand and bears the risk of loss due to fire, theft, spoilage, price fluctuations, etc.
Retailers often carry goods from manufacturers to their retail outlets.
Some retailers grant credit facilities to their customers and provide the facility of return or exchange of goods. Door delivery and after-sale service are provided by retailers.
Explain the services rendered by wholesalers to retailers.
- Financial Assistance: Wholesalers provide financial assistance to retailers by selling goods on credit.
- Meeting the Requirements: Due to limited capital and lack of space in his facility, a retailer cannot hold a large variety of products.
- Introduction of New Products: Wholesalers bring new products and their uses to the notice of retailers.
- Price Stability: Wholesalers reduce price fluctuations by adjusting supply and demand and save the retailers from loss arising from price fluctuations.
- The economy in Transport: A wholesaler often delivers goods at the doorsteps of retailers and save their time and cost of transport.
- Regular Supply: Wholesalers keep a large stock of varieties of goods and provide a regular supply of goods as per the retailer’s need.
What are the services rendered by retailers to wholesalers?
Retailers provide the following services to manufacturers and wholesalers.
Help in Distribution:
Retailers relieve the manufacturers and wholesalers of the burden of collecting and executing a large number of small orders from various consumers.
Retailer supply valuable information to wholesalers about changes in tastes, preferences, fashion etc. of consumers
Large Scale Operation:
The manufacturers and wholesalers are freed from the trouble of making individual sales to consumers in small quantities. This enables them to operate on, a relatively large scale and thereby fully concentrate on their other activities
Help in Promotion:
Retailers participate in the promotional activities carried by manufacturers and wholesalers such as short-time offers, coupons, free gifts, sales contests, etc. Retailers help in promoting the sale of the products.
The retailer is able to provide more personal attention to his customers than the wholesaler is, He gives special services on the spot when the articles require minor repairs.
Explain the services rendered to consumers by Retailers.
- Regular Supply of Goods: Retailers maintain ready stock of various products of different manufacturers for sale to consumers.
- New Products Information: The retailers provide important information about the new arrival of products through their personal.
- Credit Facilities: Sometimes retailers provide credit facilities to their customers and enable them to increase their level of consumption.
- Wide Selection: Retailers generally keep stock of a variety of products of different manufacturers.
- Miscellaneous Services:
- Retailers provide free door delivery services to the customers.
- They provide after-sale service to customers.
- They allow cash discounts on their sales.
What are the factors affecting a channel of distribution?
The factors determining the suitability of a channel for product distribution are as follows:
Seasonal, products are distributed through less layer of middlemen. Non-standardized products that are made according to customer specifications may be delivered directly. But standardized products may be passed on through middlemen.
Trucks which are heavily needed to be distributed with fewer layers of distribution. The life of perishable products is limited and should reach the consumer at the earliest. e.g. Flowers and milk. Technical products which require pre-sale and post-sale advice from technicians should be directly distributed by the producer or with middlemen. e.g: Air-conditioners, Washing machine.
The size of the market for the goods is a major factor while selecting the route for distribution of products. Distribution in large geographical areas requires more middlemen. Middlemen are nòt required to distribute products in a limited area.
Number of Consumers:
Làrge purchases made by few consumers require centralized distribution. Large number of consumers making purchases in small quantities requires more middlemen.
The capacity of the Manufacturer:
A financially strong producer may select a high technology oriented channel which will reduce cost in the long run. Manufacturers with large volume of production may open direct branches in cities and towns where there is more sales.
They can also provide more services expected by consumers. Small and medium producers require the services of middlemen for selling their products. A producer offering wide range of products can have a long channel as he can defray the cost of distribution over more number of products.
Cost and Time Involved in the Channel of Distribution:
The channel cost should go along with the quality of service provided by middlemen.
Ordinary goods are routed through economical channel even though the time taken by the channel for delivery is more.
Services Required along with the Product:
Machinery or equipment which needs to be installed and demonstrated should be sold with the shorter channel. Technical Services can be provided by manufacturers or by their trained technicians. Therefore a shorter channel is preferred for sales.
Life Cycle of the Product:
An established product can select an ordinary channel. But a new product entering into the market should be carefully promoted by experienced middlemen.
11th Commerce Guide Channels of Distribution Additional Important Questions and Answers
I. Choose the Correct Answer:
With respect to a channel of distribution, the number of intermediary levels within the channel indicated the ……………….. of a channel.
A large marketing intermediary, but not as large as a sole selling agent in terms of dimension, resources, and area of operation is known as ……………..
b. Sole selling agent
c. Direct marketing channel
Mr. X is studying the potential for selling his company’s products in the USA. As part of his analysis, he is assessing the number, types and availability of wholesalers and retailers. Mr. X is studying the countries…………………
a. Social and Cultural norms
b.Legal and political structure
c. Distribution channel structure
d. Technological study
c. Distribution channel structure
The purchases and sales between the producers and wholesalers, and from the wholesalers to retailers are called as ………………
The person who guarantees to the principal regarding the collection of cash from credit sales is called………….
b. Del-credere Agent
d. Commission Agent
b. Del-credere Agent
II. Very Short Answer Questions:
What is meant by Mail-order Business?
The manufacturer collects orders from the consumers through post by mail or phone and delivers the products themselves. This kind of business is known as Mail-order or Phone- order business.
What do you mean by B2B transactions?
All purcháses and sales between the producers and wholesalers,and from the wholesalers to retailers,etc. are called Business to Business (B2B) transactions.
What do you mean by B2C transactions?
All businesš transactions between the producers or wholesalers or retailers on the one side and consumers on the other side are called Business to Consumers(B2C).
III. Short Answer Questions:
Define Channel of Distribution:
According to Cundiff E.W and Still, a channel of distribution may be defined as “a path traced in the direct or indireët transfer of title to a product as it moves from the producer to ultimate consumers”.
List the types of channel of distribution:
The types of channel of distribution are as follõws:
- Channels based on the middlemen
- Channels based on the type of goods and services
- Channel based on the national and international market
Write short notes on ‘Auctioneers’:
Auctioneers are agents who sell goods by auction on behalf of their principals. The auction sale is made through a notification to the public. The notice clearly mentions the date, time, place and details of goods which will be widely published through newspapers, posters, leaflets and announcements etc., Auction sale may be “WITH RESERVE” and “WITHOUT RESERVE”. In case of auction “WITH RESERVE” no sale can take place below the minimum price fixed by the seller, which is known as “Reserve Price”.
In case of auction “WITHOUT RESERVE” the auctioneer is bound to sell the product to the highest bidder. The price for which the bid is accepted is called “knocked down price”. Striking a hammer on the desk indicates the acceptance of a bid by auctioneer. After the highest bid is accepted, the auctioneer becomes the agent for both the seller and the buyer. For his services, the auctioneer is entitled to receive a commission, which is a certain percentage of the sale proceeds.
IV. Long Answer Questions:
Write a note on VAR:
The VARs receive the products from the manufacturers, incorporate them as if their own products by adding value-enhanced service and sell them to customers. VARs provide highly skilled technical support so that the customer can have world-class satisfaction.
Microsoft India has appointed Avnet and Redington as VARs in India. A solar panel producer may have builders as VARs and the builders offer solar panel as additional facility to the buyers of flats, etc.
Explain the types of Mercantile Agents:
A Broker is one who bargains for another and receives a commission for his service. He is paid ‘brokerage’ for his services. He brings the buyer and the seller to the negotiating process and arranges for finalizing contracts between them. The principal businessman does not pass on either possession of goods or the ownership of goods to the broker. The broker is not personally liable for the contracts concluded. A real estate agent acts for both the buyer and the seller.
A factor is a mercantile agent to whom goods are entrusted for sale by a principal. He takes physical possession of the goods, though he does not obtain ownership of the goods. A factor sells goods in his own name without revealing the name of his principal. He may even sell them on credit and other usual terms. He is entitled to receive payment for the goods sold and he gives valid receipts. He is liable for his action. He can sue or be sued for his contracts. He has a right of lien on goods in his possession for his unpaid charges.
Commission Agent or Consignees:
A commission agent buys and sells goods on behalf of the principal for a fixed rate of commission for all his transactions. All risks connected with his transactions are borne by the principal. His functions are more varied than a broker and he takes decision over the prices and terms of the sale. He has expert knowledge of the goods and trends in the market. He takes possession of the goods without title over them and sells in his own name.
The agent who guarantees to the principal the collection of cash from credit sales is called belvedere agent’. If they do not pay, the agent would bear the loss himself. He is given an additional commission known as belvedere commission for bearing the risk. He carefully selects the buyers to whom credit can be extended based on their honesty and reliability.
Auctioneers are agents who sell goods by auction on behalf of their principals. Auction sale is made through a notification to the place and details of goods which will be widely published through newspapers, posters, leaflets and announcements etc., Auction sale may be “WITH RESERVE” and “WITHOUT RESERVE”.
A Warehouse keeper accepts goods for the purpose of storage in his warehouse. He should exercise reasonable care and diligence in the storage of goods. He is entitled to payment for his services. He will have a lien on the goods in case the payments for his services remain unpaid.
The warehouse keeper delivers to the owner of the goods a receipt known as warehouse keeper’s receipt or. certificate. It is an acknowledgement issued by warehouse keeper for the receipt of goods by him for the purpose of storage. It is not a document of title to goods. He may issue a ‘Warehouse warrant’, which is a document of title to goods.
Differentiate Wholesaler and Retailer:
|SI. No||Bases of Difference||Wholesaler||Retailer|
|1.||Link||A wholesaler serves as a link between producers and retailers. Wholesaler is the first link in the chain of distribution of goods||A retailer provides a link between wholesalers and consumers, retailer is the last link in the chain of distribution of goods|
|2.||Scale of operations||A wholesaler carries on business on a large scale and requires huge capital||A retailer deals generally on a small scale and capital invested in retail trade is relatively small|
|3.||Range of goods||A wholesaler generally deals in one commodity||A retailer deals in a large variety good and caters to the diverse needs of his end customers.|
|4.||Dealings||A wholesaler generally sells goods to retailers on credit||A retailer usually sells goods to end consumers on a cash basis.|
|5.||Purpose of selling||A wholesaler sells goods for resale.||A retailer sells goods for ultimate consumption or use.|
|6.||Source of supply||A wholesaler buys goods from manufacturers and their agents in large quantities.||A retailer generally buys goods from wholesalers and their agents in small quantities.|
|7.||Location||A wholesaler operates his business in big commercial cities and expands his business to different areas.||A retailer operates in a smallest village and also big cities and locates his business in particular place of area.|