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Samacheer Kalvi 11th Commerce Solutions Chapter 23 Channels of Distribution
Get the Questions and Answers, in Tamilnadu State Board 11th Commerce Solutions for Chapter 23 Channels of Distribution. Learn the concepts of 11th Commerce Chapter-Wise by referring to the Tamilnadu State Board Solutions for Chapter 23 Channels of Distribution Questions and Answers. Hence we suggest the students to Download Samacheer Kalvi 11th Commerce Book Solutions Questions and Answers pdf to enhance your knowledge.
Samacheer Kalvi 11th Commerce Channels of Distribution Textbook Exercise Questions and Answers
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.
(c) Warehouse – keeper
(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 service.
According to Cundiff and Still “wholesaler buys from the producer and sells 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 commission for his service. He is paid ‘brokerage’ for his services. He brings buyer and the seller to the negotiating process and arranges for finalising contracts between them.
What are the classifications of the merchant middlemen?
Merchant middleman can be further sub – divided into:
Who are the mercantile agents?
Mercantile Agents are also called functional middlemen. 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 mercantile agent.
III. Short Answer Questions
What do you understand by channels of distribution?
A channel is the route through which the goods are passed on to the ultimate consumer. There are direct channels or routes of distribution without middlemen. Indirect channel consists of one or more middlemen performing different functions. Middlemen help in the flow of goods towards the lakhs or 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.
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 product.
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?
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 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 functions of Retailers?
- Buying : A retailer buys a wide variety of goods from different wholesalers after estimating customer’s demand.
- Storage : A retailer maintains a ready stock of goods and displays them in the shop.
- Selling : The retailer sells the goods in small quantities according to the demand taste and preference of consumers.
- Grading and Packing : The retailer grades the goods which are not graded by manufacturers and wholesalers.
- Risk – bearing : 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.
- Transportation : Retailers often carry goods from manufacturers to their retail outlets.
- Financing : Some retailers grant credit facilities to his customers and provide the facility of return or exchange of goods.
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 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.
- Economy in Transport : A wholesaler often delivers goods at the door steps of retailers and save their time and cost of transport.
- Regular Supply : Wholesalers keep 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?
- 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.
- Market Information 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.
- 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.
- Personal Attention 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 a 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 affecting a channel of distribution are as follows:
- Product Characteristics : Seasonal products are distributed through less layer of middlemen. Non standardized products that are made according to customer specifications may be delivered directly.
- Market Characteristics : The size of the market for the goods is a major factor while selecting the route for distribution of products.
- Number of Consumers : Large purchases made by few consumers require centralised distribution.
- Middlemen factor : Middlemen who are experienced and have produced more sales are wanted by all producers. Long channel naturally increases the cost and price of the product.
- Capacity of the Manufacturer : A financially strong producer may select a high technology oriented channel which will reduce cost in the long run.
- Cost and Time Involved in the Channel of Distribution : The channel cost should go along with the quality of service provided by middlemen.
- Services Required along with the Product :Machinery or equipment which need to be installed and demonstrated should be sold with shorter channel.
- 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.
A Rama industry was established to manufacturer fashion shoes. Since they were new in the market, they decided to sell their product through wholesalers. They appointed one wholesaler in each district and promised them verbally that they will remain the exclusive wholesalers in the area. After three years during one of the review meetings the sales manager informed that if company sells directly to retailers, they will be able to offer competitive prices, which will increase sales volume and eventually profits. He was directly supporting elimination of wholesalers.
a. Should the company follow sales manager’s suggestion and start direct business with retailers?
b. What values would the company ignore if they by – pass wholesalers to earn extra profit?
No, I don’t think that company should follow sales manager’s suggestion and start direct business with retailers, because it is the wholesalers who have put in all the effort to establish sales network and prepared a market for new product. The company has though verbally promised wholesalers the exclusivity to sell, so it may not send good signals about the company in the market. The wholesalers may sell the competitors’ product more aggressively, which may affect the company’s sales adversely.
Values ignored are:
- Mutual trust
- Importance to relationships
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