A manufacturer should keep into consideration the following factors while selecting a channel of distribution.

i. Considerations Related to Product: When a manufacturer selects some channel of distribution he/she should take care of such factors which are related to the quality and nature of the product. They are as follows:

a. Unit value of the product: When the product is very costly it is best to use small distribution channel. For example, Industrial Machinery or Gold Ornaments are very costly products that’s why for their distribution small distribution channel is used. On the other hand, for less costly products long distribution channel is used.

b. Perishability: A manufacturer should choose minimum/no middlemen as channel of distribution for such an item or product which is of highly perishable nature. On the contrary, a long distribution channel can be selected for durable goods.

ii. Considerations Related to Market: Market considerations are given below:

a. Number of buyers: If the number of buyers is large then it is better to take the services of middlemen for the distribution of the goods. On the contrary, the distribution should be done by the manufacturer directly if the number of buyers are less.

b. Types of buyers: Buyers can be of two types: General Buyers and Industrial Buyers. If the more buyers of the product belong to general category then there can be more middlemen. But in case of industrial buyers there can be less middlemen.

iii. Considerations Related to Manufacturer/Company: Considerations related to manufacturer are given below:

a. Desire to control the channel of distribution: Manufacturer ambition to control the channel of distribution affects its selection. Consumers should be approached directly by such type of manufacturer. For example, electronic goods sector with a motive to control the service levels provided to the customers at the point of sale are resorting to company owned retail counters.

b. Financial strength: A company which has strong financial base can evolve its own channels. On the other hand, financial weak companies would have to depend upon middlemen.