Outline the factors which influence the choice of distribution channel?

The factors influence the choice of distribution channel. They are:

Characteristics of the product: If the . products are perishable in nature like eggs, milk etc, they are supplied directly or with the help of short channels. Heavy and bulky products like cement, steel and electrical equipment’s are also distributed directly or through short channels. If the products are light weight and small in size like dress material, stationery, toothbrush and paste, mechanical products like time-clocks, electronic toys etc, they can be distributed through long channels.

Characteristics of target customers: Long and multiple channels are required, if there are large number of customers and geographical area is extensive. Long channels prove to be useful if the customers make frequent purchases of small quantities at irregular intervals. If there are few customers who purchase large quantities at regular intervals and live in small areas, short channels and direct selling proves to be the best.

Supply characteristics: If large number of producers exist in various regions that produce and supply the goods, long channels are suitable. If small number of producers produce goods in one region, then goods can be distributed through short channels.

Potential Volume of Sales: One has to depend upon the target volume of business while selecting the suitable channel. Between various channels, the volume of sales and ability to reach the target audience varies. It sometimes happen .that one channel may not prove to be sufficient and so more channels need to be used.

Long run effect on profit: One should choose the channel according to the profits in short and long run. One can go for more than one channel, if the product’s demand is high. More channels may not prove to be economical if the demand falls is course of time. Future market implications should be considered while choosing a channel.

Types of Middlemen: This factor is also important while selecting a suitable channel. This is so because its the middlemen who performs various functions like grading, storage, packing, branding etc. Producers prefer that particular channel in which the middlemen are efficient and dependable. Distribution efficiency lies on the size, location and financial position of middlemen.

Tags: B.Com

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