question_answer

"Generally, consumers prefer to buy goods directly from the producers but it is not always possible." Explain four different factors responsible for this.

Answer:

Generally, consumers prefer to buy directly from the producers but it is not always possible. Instead, consumers are supposed to take the help of channels of distribution, i.e. middlemen. In this channel, mainly agents, wholesalers and retailers are included. Following four reasons are responsible for this are: (i) Geographical Difference There are limited number of producers of any product while consumers are unlimited and scattered over a wide geographical areas. Hence, it is not possible to buy goods directly from the producers. (ii) More Risk At the time of transportation of goods from one place to another, element of risk is always there. By using channel of distribution, such type of risk can be avoided. (iii) Heavy Buying Costs It is a costly and difficult task to contact the producers directly. (iv) Unavailability of Credit Facility Generally, it is not possible to have credit facility while purchasing directly from the producers.