Linear Market

Posted in Marketing and Strategy Terms, Total Reads: 535

Definition: Linear Market

Linear market is a type market that involves linear flow of goods from one end of the supply chain that is Supplier to the other end of the supply chain that is customer.

There are many actors playing in a traditional supply chain. Normally there are 2 types of flow in a traditional supply chain.

Type 1- That involves distributor; In this type, distributors are the ones who sell the products to the retailers

Type 2- That involves wholesalers; In this type, wholesalers get the goods from the firm and sell it to the retailers.

It can also be a mix of above 2 type; this is what, is normally seen in a traditional market

Sometimes, in order to sell more wholesalers reduces their already small margins further to sell the products at cheaper rate to the retailers. Thus distributors get to sell less to the retailers and are driven out of the market. Let’s take an example


Suppose distributors are getting product at 105 from the firm and wholesalers at 107. Retailers are getting it at 110 that is fixed from both the sources. In order to sell more distributors further decrease their selling price to 109; due to this all the retailers start buying from wholesalers rather than distributors who are selling it at 110 and thus distributors are wiped out from the market. This is just one of the phenomenon of a linear market.



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