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The relationship between producers, intermediaries, and customers falls into one of the following three categories: direct, indirect, or hybrid. Producers that service their customers directly without the use of an intermediary may do this with their own direct sales force.

Particularly in emerging markets, distribution systems are often complex and hard to penetrate, consisting of many layers of intermediaries with only limited transpar-ency. In other cases, distribution networks are scattered or inefficient, or non-existent altogether. Notwithstanding such limitations, companies usually select one or more of the following options.

  • These intermediaries bring buyer and seller together by negotiating specific deals, but without taking ownership of the product. They are often employed temporarily and are paid by commission from the parties hiring them.

  • These intermediaries distribute the product and offer value through services such as stocking inventory, credit line extensions, and after-sales support. They are often seen in B2B markets, but can also be found dealing directly with consumers, such as the automobile distributors.

  • A franchise is a continuing relationship in which a franchisor grants to a franchisee the rights to operate or to sell a product. The franchisor provides the tradename, product, methods of operation, and so on. The franchisee, in return, pays the franchisor and has to adhere to a strict set of rules laid out in their contract.

  • These intermediaries take title to the goods they handle and are

    involved in their physical distribution. They sell primarily to other middlemen or directly to industrial, commercial, or institutional customers.

  • Successful large retailers like Wal-Mart or Tesco link producers

    and end-customers and perform an invaluable service for both. There are several different types of retailers, such as department stores, discount retailers, supermarkets, hypermarkets, and convenience stores. In general, they can be distin-guished by the amount of service they offer, their product line, and relative price emphasis.