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What factors would you keep in mind while deciding upon the channels of distribution for your product ? |
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Answer» Choice of appropriate channel of distribution is a very important marketing decision, which affects theperformance of an organisation. Important factors affecting the choice of channels of distribution by themanufacturer are: 1) Product Related Factors: The choice of channels of distribution depends upon the factors related to theproduct. Products can be perishable or nonperishable, industrial or consumer product, depends upon thevalue of product and the degree of complexity of the product. Industrial products require short channels,where Consumer products can be better distributed by long network of channels. Perishable products likefruits, vegetables, and dairy products are best sold through short channels, while non-perishable products liketoiletry and fabrics require longer channels to reach wide spread consumers. If the unit value of a product islow, long channels are preferred while in case of high value products, shorter channels may be used. In caseof complex products, short channels are preferred but if the product is a non-complex one, it is sold throughlong channels. 2) Characteristics of company: The important company characteristics affecting the choice of channels ofdistribution include the financial strength of the company and the degree of control it wants to hold. Directselling involves lot of funds to be invested, whereas Indirect selling through intermediary does not need hugefunds to be invested. Thus, if the firm has plenty of funds it may go for direct distribution otherwise, indirectchannels. Similarly if the management wants to have greater control on the channel members, short channelsare used otherwise, it can go in for longer channel. 3) Competitive Factors: The choice of channel is also affected by the channel selected by competitors. Thedecision on choice of channel of distribution is made depending upon the policy of the firm, whether it wantsto go with the competitors or be different from them. 4) Market Factors: Market factors like size of market, population of potential buyers and quantity purchaseddetermines choice of distribution channel. If number of buyers is small, short channels are used otherwiselonger are used. If the buyers are concentrated in a small place, short channels may be used, otherwise alonger channels. Similarly if the size of order is small large number of intermediaries may be used. |
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