A ‘Financial system’ is a system that allows the exchange of funds between financial market participants such as lenders, investors, and borrowers. Financial systems operate at national and global levels.

In a global view, financial systems include the International Monetary Fund, central banks, government treasuries and monetary authorities, the World Bank, and major private international banks.

The three parts of a financial system are savers, financial institutions, and investors. Savers put money in financial systems such as banks. These banks then lend money to investors who make money by investing in their company and paying off the investment with interest.

A financial intermediary is an institution or a person that acts as a link between two parties of a financial transaction. The parties could be a bank, a mutual fund, etc., where typically one party is the lender and the other, the borrower.

Financial intermediaries serve as middlemen for financial transactions, generally between banks or funds. These intermediaries help create efficient markets and lower the cost of doing business. Financial intermediaries offer the benefit of pooling risk, reducing cost, and providing economies of scale, among others.

What are the two main types of intermediaries and how do they differ? Two main types of marketing intermediaries are wholesalers and retailers. Wholesalers sell primarily to retailers, to other wholesalers, and to organizational users such as government agencies, institutions, and commercial operations.

Intermediaries put buyers and sellers together without taking ownership of the product, service or property. They are not wholesalers or distributors, which buy products and then resell them. They are usually paid on a percentage of the total transaction.

Types of Distribution Channels – 4 Important Types: Direct Sale, Sale through Retailer, Wholesaler, Agent

• Direct Sale:
• Sale through Retailer:
• Sale through Wholesaler:
• Sale through Agent:
• Intensive, Selective and Exclusive Distribution:

Types of Distribution Channels

• Direct Channel or Zero-level Channel (Manufacturer to Customer)
• Indirect Channels (Selling Through Intermediaries)
• Dual Distribution.
• Distribution Channels for Services.
• The Internet as a Distribution Channel.
• Market Characteristics.
• Product Characteristics.
• Competition Characteristics.

The three types of distribution channels are wholesalers, retailers, and direct-to-consumer sales.

E-commerce is the most efficient distribution channel available for a business. It decreases dramatically the need to use multiple storage locations, multiple distributers and brokers to connect you to retailers to sell your product line.

The Three Types of Distribution

• Intensive Distribution: As many outlets as possible. The goal of intensive distribution is to penetrate as much of the market as possible.
• Selective Distribution: Select outlets in specific locations.
• Exclusive Distribution: Limited outlets.

5 Important Factors Affecting the Choice of Channels of Distribution by the Manufacturer

• Unit Value of the Product:
• Standardised or Customised Product:
• Perishability:
• Technical Nature:
• Number of Buyers:
• Types of Buyers:
• Buying Habits:
• Buying Quantity:

We have to consider the following factors for the selection of channel of distribution:

1. (i) Product:
2. (ii) Market:
3. (iii) Middlemen:
4. (iv) Company:
5. (v) Marketing Environment:
6. (vi) Competitors:
7. (vii) Customer Characteristics:
8. (viii) Channel Compensation:

Distribution channels are important to businesses as they allow for the smooth delivery of goods or services to a customer. If a business does not source the best collection of businesses for this purpose, it can lead to unhappy customers and an inadequate provision of services.

Distribution channel refers to a network of intermediaries who enable distribution of a product from the manufacturer to the ultimate consumer. The various intermediaries include distributors, wholesalers, retailers and e-tailers/e-commerce intermediaries.

Selection of appropriate distribution channel is very important because several elements of the marketing-mix like price and promotion are closely inter-related with and inter-dependent on the distribution channels. A large number of middlemen are available through which a product can be distributed.

The following are examples of distribution.

• Retail. An organic food brand opens its own chain of retail shops.
• Retail Partners. A toy manufacturers sells through a network of retail partners.
• International Retail Partners.
• Wholesale.
• Personal Selling.
• Direct Marketing.
• Ecommerce.
• Direct Mail.

A direct channel of distribution is the means by which a company gets its product straight to the consumer without using any intermediaries. However, a company that is responsible for the sale, transportation and delivery of its products directly to the customer is using a direct channel of distribution.

There are two types of distribution channels: direct and indirect. As the names would imply, direct distribution is a direct sale between the manufacturer and the consumer, and indirect distribution is when a manufacturer utilizes a wholesaler or retailer to sell their products.

The direct channel is the simplest channel. In this case, the producer sells directly to the consumer. The most straightforward examples are producers who sell in small quantities….Examples of the direct channel include:

• Etsy.com online marketplace.
• Farmer’s markets.
• Oracle personal sales team.
• A bake sale.

Direct channels allow the customer to buy goods directly from the manufacturer, while an indirect channel moves the product through other distribution channels to get to the consumer. They can either be sent to a retail store or directly to a customer’s residence.

Indirect sales are the sale of a good or service by a third-party, such as a partner or affiliate, rather than a company’s personnel. Indirect sales may be contrasted with direct sales, in which consumers purchase directly from the manufacturer.

Indirect Customer means any person who has entered into an agreement with the Company under which such person will refer or direct other persons (including but not limited to the Customer) to purchase goods from the Company; Sample 1.