Which Are The Factors Affecting The Selection Of Distribution Channel?

The following factors must be considered before selecting the distribution channel.

Nature of product:
Nature of product has influence on the selection of a channel or distribution. In the case of industrial goods like machinery and equipment. The manufacturer sells directly to industrial user, but in the case of tools, sales take place through middlemen.

Nature of market:
Choice of suitable channel of distribution also depends on the nature of market. Location a buying habits of buyers are also analysed.

Distribution expenses:
If the producer makes direct selling, he will have to spend on distribution. So, if the product gets good response from the dealers, a producer prefers to sell through them to reduce his distribution expenses.

Mutual cooperation:
Choice of channel of distribution depends on the mutual cooperation between the manufacturer and the dealers.

Company considerations:
The character of the company also influences the selection of channel. If the management lacks marketing know how, it may prefer to depend on middleman.

Prompt payment:
A producer may not like to sell to retailers or big consumers because they insist to make purchase on credit. He, therefore, prefers to sell to a wholesaler who purchases usually on ready cash.

Popularity of goods:
If the goods are popular among the consumers, the dealers themselves come forward to buy. Then the producer may not like to open his own shops to sell the goods.

Price and profit:
Where the price of the goods is low and the profit margin is small. It is profitable for the producer to sell through the dealers. Here, the producer can maximize his profit by depending on quality production.

Structure of retailing:
Selection of channel also depends on the structure of retail trade in a product. The manufacturer will consider the number of stores selling the product, convenience of shopping to the buyers, service provided by the retailers, availability of retailers and sale volume before selecting a channel of distribution.

Financial resources:
A firm's reputation can affect its channels. A financially strong company needs middlemen less than one, which is financially weak. A business with adequate finances can establish its own sales force and even branch organization.

Factors To Consider When Selecting Communication Channels?

Why a business might use more than one method of transportation to deliver its product to customer

Types of the product

Selection of a distribution channel is determined by multiple factors but the most important one is to understand your product, is it an exclusive product or is it a normal good sp that it does not conflict with the other Ps of the product. You should know how you want to position the product. If you want to make it exclusive then the distribution channels will be few and selected in such a way that they are most likely to be reached by the potential customers. If its highly priced then it will be available in outlets where customers with a specific income group are most likely to shop. If the nature of the product is such that it should be readily available then it should be distributed through all possible channels. Most importantly, the channel selected must match the image of the product that the customers perceive so that there is n confusion.

1. Costs
2. Geographic dispersion of the market
3. Type of product e.g. Whether it is complex, simple, new, perishable, heavy
4. Competition; the choice of channel by rivals
5. Price elasticity of demand
6. Legal restrictions e.g. Prescription drugs
7. The company ; size and services
8. Quantity to be delivered
9. Budget available
1o. The market coverage required: Geographical concentration of customers would require   shorter channels

What are the general factors to consider when choosing channels of communication?

Nature of Goods:

The first and most factor that influences on the choice of type of channel of distribution is the nature of goods. Perishable goods like cake, breads and snakes are needed to the sold quickly are sold normally directly buy the manufacturers to the consumer through own retail outlets. Goods can be last longer can be handled by more intermediaries to insure a larger market.

Size of the Market:

In order to ensure that their goods are marketed as widely as possible, producers who do not want be load with the problems of managing their own retail outlets normally sale their goods to wholesalers. Thus we see that bigger the market, the larger will be the channel of distribution.

Quantity of Goods Bought:

Most producers are normally not willing to entertain small orders from small retailers, because of the large amount of paper work involved. However, orders from large retailer or wholesalers are normally large.

Size of Firm Producing the Goods:

Very big firms, which have the financial, and human resources normally not only produce the goods but also setup their own retail outlets. Smaller sized producers may prefer to concentrate on the technical aspects of the production and leave the marketing of goods to other.