(a) illustrate any four channels of distribution for consumer products. (b) List and explain any four pricing strategies.

Answer Details

(a) Four channels of distribution for consumer products

Channel 1 (Zero-level / Direct):

Producer → Consumer

Channel 2 (One-level):

Producer → Retailer → Consumer

Channel 3 (Two-level):

Producer → Wholesaler → Retailer → Consumer

Channel 4 (Three-level):

Producer → Agent → Wholesaler → Retailer → Consumer

In the direct channel the producer sells straight to the consumer with no middlemen; each additional level introduces one more intermediary between the producer and the final consumer.

(b) Four pricing strategies (explained)

1. Penetration pricing: Setting a low initial price to attract many customers quickly and gain a large share of the market.
2. Price skimming: Setting a high initial price for a new or unique product to earn high profit from buyers willing to pay more, then reducing it later.
3. Cost-plus (mark-up) pricing: Adding a fixed percentage of profit to the total cost of producing the item to arrive at the selling price.
4. Competitive pricing: Fixing the price based on what competitors charge for similar products, in order to remain competitive in the market.

Other acceptable strategy: psychological pricing (for example pricing an item at N999 instead of N1,000).