Describe the advantages of the two different distribution channels employed by Lever.
What will be an ideal response?
Lever Brothers uses two different channels of distribution. The first one employs two middlemen: A manufacturer sells its products to the wholesaler; the wholesaler sells the product to the retailer; the retailer sells the product to the consumer. The second channel of distribution involves only one middleman: The manufacturer sells the product to
the retailer; the retailer sells the product to the consumer.
Because distribution channels are described by the number of channel levels involved, it is obvious that Lever employs two distinct distribution channels. (The reasons for using these two channels are not completely known.) With regard to the first channel, even though it may serve the consumer more accurately, it is believed that the
greater the number of levels (or the more middlemen), the less control and greater complexity. With longer distribution channels, there is the possibility that channel conflict may occur. Therefore, in order to decrease the likelihood of this conflict from occurring, it is beneficial to use a smaller channel. The smaller channel of distribution can also give the producer more control (such as in the second channel).
Lever may become more efficient if it does not use the first channel. Because the second channel of distribution gives the producer more control, it would be beneficial to use this channel. On the other hand, the second channel may be needed to serve small retailers, which the company may find difficult to serve directly.
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