August 17, 2023

A Form of Distribution in Which Manufacturer Makes an Agreement Mcq

In the business world, distribution is a crucial aspect of getting products in the hands of consumers. There are many different methods of distribution that manufacturers can use, and one of the most commonly employed is an agreement-based model. In this article, we will take a closer look at this form of distribution, exploring what it is, how it works, and its benefits.

What is an Agreement-Based Distribution Model?

An agreement-based distribution model is a method of distribution in which the manufacturer enters into agreements with various third-party businesses, such as wholesalers, retailers, or distributors, to sell their products. In this model, the manufacturer maintains control over the production of the product, while the third-party businesses handle the marketing, promotion, and sales.

How Does an Agreement-Based Distribution Model Work?

In an agreement-based distribution model, the manufacturer typically creates agreements with several different third-party businesses, each with a specific area of expertise. For example, a manufacturer of clothing might enter into agreements with a wholesaler, a retailer, and an e-commerce platform. The wholesaler might be responsible for distributing the product to retailers, while the retailer sells the product to consumers. The e-commerce platform might provide an online marketplace for consumers to purchase the product.

The specific terms of the agreement vary depending on the type of business and the product being sold. Generally, the manufacturer sets the price of the product, while the third-party businesses earn a percentage of the sale price.

What are the Benefits of an Agreement-Based Distribution Model?

One of the main benefits of an agreement-based distribution model is that it allows the manufacturer to focus on the production of the product rather than the marketing and sales. This can lead to higher-quality products, as the manufacturer can invest more time and resources into the production process. Additionally, the third-party businesses often have established networks and expertise in marketing and sales, which can lead to increased sales and exposure for the product.

Another benefit of an agreement-based distribution model is that it allows the manufacturer to reach a wider audience. By partnering with several different types of businesses, the manufacturer can reach consumers through multiple channels, including brick-and-mortar stores, online marketplaces, and more.


In conclusion, an agreement-based distribution model is a commonly employed method of distribution in the business world. By entering into agreements with third-party businesses, manufacturers can focus on producing high-quality products while leaving marketing and sales to experts in the field. This can lead to increased exposure and sales for the product, helping manufacturers to reach new audiences and expand their businesses.