Factors to consider before selecting a distribution channel

Business studies study module

Factors that influence the choice of a distribution channel include the following:

  • Product nature. Perishable products should be sold directly to the consumers because delays may result to losses since they go bad fast. In addition, bulky products need direct selling in order to reduce transportation and stock handling costs.
  • Nature of the market. Where the market is concentrated in one area, direct selling is appropriate. A longer channel of distribution is preferred where the market is widely spread.
  • Role of intermediary. The channel chosen should be able to perform the services related to the product being sold e.g. for technical goods, the middleman should be able to offer technical support to the customers.
  • Resources and size of the firm/producer. If the producer is small, then direct selling would be appropriate. Large firms with sufficient financial resources can opt for long channels of distribution.
  • Channels used competitors. If a firm wants its products to compete with those of the competitors, then is it prudent to use similar channels. A firm that wants to avoid competition should use a different channel of distribution.
  • Government policy. The channel chosen should be able to meet government regulations such as all middlemen distributing pharmaceutical products must be recognized the relevant government bodies (Pharmacy and Poisons Board).
  • Marketing risks. In the event the firm wants to avoid risks related to distribution, it will opt for middlemen.

Questions

  1. State four channels for distributing imported goods.
  2. Explain five factors that can influence the choice of a channel of distribution.
  3. Outline five costs incurred middlemen in the distribution process.
  4. Describe the roles played middlemen in the distribution chain.
  5. Outline the circumstances under which a producer would sell directly to consumers.



(Visited 112 times, 1 visits today)
Share this on:

Leave a Reply

Your email address will not be published. Required fields are marked *