question_answer 16)

Explain the factors determining choice of channels of distribution.

Answer:

The choice of channels depend on various factors, which are discussed follows (i) Product Related Factors The important product related consideration is deciding the channels. It includes whether the product is an industrial product or a consumer product. Industrial product require shorter channel and consumer products require longer or channel. (ii) Company Characteristics The important company characteristics affecting the choice of channels of distribution include the financial strength of the company and the degree of control it wants to hold on other channel member. Direct selling involves lot of foods to be Invested in fixed assets say starting own retail outlets or engaging large number of sales force. Similarly if the management want to have greater control on the channel number, short channels are used but if the management do not want more control over the middlemen, it can go in for longer channel or large number of intermediaries. (iii) Competitive Factors The choice of channel is also affected by what the competitor has selected as its channel. Sometimes, firm may decide to go for the same channel and sometimes absolutely opposite. (iv) Market Factors Important market factors affecting the choice of channel of distribution include size of market, geographical concentration of potential buyers and quantity purchased. (v) Environmental Factors Sometimes environmental factors also helps in deciding the channel of distribution, e.g., in a depressed economy, marketers use shorter channels to distribute their goods in an economical way.