Question

Helpequip Ltd. is a company dealing in distribution of medical equipments. The company recently imported 500 units of a diabetes monitoring machine which tests the sugar levels without taking blood samples. For deciding the marketing strategy, the Chief Executive Officer of the company called a meeting of the marketing heads of different zones. In the meeting, Sanjeev, the North Zone marketing head suggested that they need to visit hospitals to explain personally to the hospital staff who would be using the machine since the machine is sophisticated. He also suggested that additional staff may also be recruited for the same.

Rishu, another zonal head, was of this opinion that since a large amount of money had been spent on the purchase of the machines, additional funds were not available for recruiting the personnel as suggested by Sanjeev.

Ankur, a newly appointed zonal head of South Zone, suggested that since the size of the
order was not large, a detailed study of the factors determining the choice of channels of distribution was required before making the right choice.

1) Identify the factors influencing the choice of channels of distribution which were discussed in the meeting.

2) Also, explain the other considerations to be taken care of in each factor identified in part (a).

Answer 1

1) Factors influencing the choice of channels of distribution which were discussed in the meeting are

a) Product-related factors- ‘Machines were sophisticated they need to visit hospitals personally to explain its working to the hospital staff who would be using the machines

b) Company characteristics- ‘The company was short of funds to pay the additional staff.

c) Market factors- “Size of the order was not large.’

2)

a) Product-related factors- Machines are complex products requiring technical details. Thus, shorter channels would be more suitable.

b) Company characteristics- There financial strength of the company determines the channel of distribution used by it. Shorter channels of distribution require greater funds. However, in the given case, the company is short of funds and thus would opt for indirect channels of distribution.

c) Market factors- The size of the order determines the choice of channels of distribution which the company opts. Since the size of the order is not large, the company should go for a large number of intermediaries.