Factors affecting choice of channels of distribution:

(a) Product related factors: Industrial goods which are technical or complex (made as per order) and are of higher value generally have direct channels. Goods which are standardised, non-complex, non-perishable or low priced are normally sold through indirect channels of distribution.

(b) Company related factors: If the financial strength of the company is good and wants to hold on its channel members, it will opt for direct selling. For example, selling through its own retail outlets, mail order selling, etc.

(c) Market related factors: The size of the market, geographical concentration of potential buyers and quantity purchased affect the decision of the choice of channel. If the customers are geographically concentrated in a small place or if the order size is large enough, a direct channel of distribution can be used, otherwise indirect channel is opted by the manufacturer.

(d) Competitive factors: Choice of channel may be decided by a company either to go wit/to be different from its competitors.

(e) Environmental factors: Economic conditions and legal constraints also affect the choice of channel of distribution. In case of a depressed economy, a company may choose indirect channel to distribute goods in an economical manner.