Factors affecting distribution channel. Factors Affecting Choice of Distribution Channel 2022-12-12
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A distribution channel is the path through which a product or service travels from the producer to the consumer. There are various factors that can affect the distribution channel, including the nature of the product or service, the target market, the competition, and the available resources of the producer.
One important factor that can affect the distribution channel is the nature of the product or service. Some products, such as perishable goods or hazardous materials, may require specialized distribution channels to ensure that they reach the consumer in good condition. Other products, such as luxury goods, may require a more exclusive distribution channel to maintain their high-end image.
The target market is another factor that can influence the distribution channel. If the producer is targeting a specific geographic region, they may choose a distribution channel that is well-suited to that region. For example, if the producer is targeting a rural area, they may choose a distribution channel that includes local retailers or distributors.
Competition is also an important factor that can affect the distribution channel. If there is intense competition in the market, producers may choose a distribution channel that allows them to reach their target market more efficiently and effectively. This could include using distributors or wholesalers to reach a larger number of consumers or using e-commerce platforms to sell directly to consumers.
Finally, the available resources of the producer can also affect the distribution channel. Producers with limited resources may need to choose a distribution channel that is more cost-effective, while producers with more resources may be able to afford a more expensive distribution channel.
In conclusion, there are many factors that can affect the distribution channel, including the nature of the product or service, the target market, the competition, and the available resources of the producer. Understanding these factors can help producers choose the most effective distribution channel for their product or service.
8 Factors to Consider While Selecting Distribution Channels
Custom of the business — In most cases the channel of distribution is decided by the custom of the industry also a new entrain cannot afford to ignore them. TYPES OF DISTRIBUTION CHANNEL There are two main types of channel system which are; 1 Conventional Marketing System — This comprises of an independent producer, wholesaler, and retailer. Instruments of control are used to implement the control system. It also prevents them from breaking the norms or standards that have been decided upon. But a careful study will give him clues to the effective way in which he may counter the competition. The broader the product- line, the shorter will be the channel. For example, Delhi cloth and General Mills, Mafatlal Group of Cotton Mills, Bombay Dyeing, a Calico Mills, which have a wide product range, also sell direct through their own or authorized retail shops.
[PDF Notes] Factors Affecting Choice of Distribution Channel 2023
But most business firms prefer not to create their own distribution channel and concentrate on manufacturing. Factors Influencing Choice of Distribution Channel — 5 Important Factors: Product, Company, Competitive, Market and Environment Related Factors Deciding or selecting channels of distribution is a strategic decision for any manufacturing or trading concern. Usually, manufacturers consider which distribution channel would be objective and efficient. One can also say that channel policies should help decide how a channel system is being designed. However, it may use wholesalers to reach a large number of small retailers. Factors Affecting Choice of Distribution Channels Choice of an appropriate distribution channel is very important as the pricing as well as promotion strategy are dependent upon the distribution channel selected.
What are the various factors that affect the channel of distribution?
. What are the factors affecting channel choice? If the orders are received piece-meal or in smaller quantities, for it the services of the wholesalers could be sought. It helps in maintaining the supply of goods as per the demands in the economy. What is the hybrid channel of distribution? Such a channel can be selected by evaluating alternative channels in terms of their costs, sales potential and suitability. Size — Products that are bulky e. However goods purchased for industrial use are sold directly through agents. The new manufacturers in the beginning remain more dependent upon the middlemen.
Factors Influencing Choice of Distribution Channel — Nature of Product, Market, Firm and Middlemen Selection of distribution channel is a crucial decision. Nature of Market: Direct selling is preferable when the market is small and it is located in a narrow area. Items like milk, flowers, etc. Also, retailers will be used for marketing a product if the retail stores provide convenience of shopping to the potential consumers. Cost of Channel of Distribution — While selecting the channel of distribution, the cost of distribution and the services provided by the middlemen or agents too must be kept into consideration. If customers in a particular market expect credit facility, desire to purchase all necessaries at one place or desires for the personal services of the salesmen, the channel may be lengthier or shorter depends upon the capacity of providing those facilities for meeting out the needs of the customers. ADVERTISEMENTS: Everything you need to know about factors influencing choice of distribution channel.
Channels of Distribution Meaning, Types, Factors Affecting, Functions and Role
If it is an important product, the buyer will seek considerable information whether from the advertisement or from the middleman before deciding to go in for it. If the operations of the company are national, it would require a substantial distribution network. This leads to the final selection of channel members or partners. Dealers have to be picked or delegated for consumer durables like automobiles, white goods air-conditioners, refrigerators, washing machines , and home electronics TV, music systems. Short channels, that is, direct sales, are possible when there is a concentration of consumers in a given geographical area, and a large number of potential customers are situated in that area. A manufacturer would like to appoint that middlemen who assure greater sales volume. Therefore, computers, and other such products are sold directly.
Factors Affecting Choice of Distribution Channel (2022)
As a result, a company may opt for indirect channel to take help of middlemen in this task. Low priced and high turnover articles like cosmetics and stationery items have been found to flow through long channels. It is clear, therefore, that the nature of the product plays a vital role in the choice of the channel. Factors Influencing Choice of Distribution Channel — 2 Main Factors: Product and Market Considerations The entrepreneur must take into account the following factors namely product considerations, market considerations, and other considerations before selecting a distribution channel. Product Considerations — a Unit Value — Lower unit value of the product means longer channels.
5 Main Factors Influencing Channel of Distribution
Environmental Factors: The environmental factors like economic condition and legal constraints also affect the decision of choosing channels of distribution. For example, machine tools are usually supplied directly to factories and medical equipment directly to hospitals. A company having good financial position, on the other hand, will establish its own selling and distribution set up on overseas market to avoid overdependence on middlemen taking all other factors into consideration. The choice of suitable distribution channel is one of the most important decisions to be taken while marketing products because at the end of the day it will be the channel that will have an impact on the time and costs of distribution and the volume of the sales generated by the company. A company has to consider all these factors and make an appropriate choice.
Factors affecting choice of a Distribution Channel
Motivating Channel Members Strategies to motivate channel members are formulated by many companies to avoid channel conflicts. Product Pricing This is a sensitive issue. Level of Production — The manufacturers who are financially sound and are of a larger category, are able to appoint the sales representatives in a larger number and thus could distribute the commodities products in larger quantities. Each channel has its own advantages and limitations and every company has to make difficult choice about channels of distribution. Style — This is a dangerous element and often necessitates frequent changes in the channels.
Very often the product is supplied to the agents through the bank so that the company gets the documents discounted from the bank. Referent Power A company enjoys its image or recognition in the market. A smaller firm or one with narrower lines would find middlemen more practical. It needs to be resolved in a systematic and sequential manner, even though it is a difficult process. What are the 7 factors that influence a decision? When a company lacks such experience and skills, it has to involve middlemen, and prefers indirect channels. A small firm which cannot invest in setting up its own distribution network has to depend on middlemen for selling its product. Channel Conflict — Reasons for Conflicts 1.
