Question

Explain the factors influencing choice of a suitable channel of distribution.

Answer 1

While choosing a suitable channel of distribution, the following factors should be taken into consideration.

1. Product-related Factors:
   1. Unit value: If a unit of product has very low value, it normally flows through a long channel.
   2. Perishability: Perishable products like vegetables and fruits should be sold directly to consumers in order to avoid losses.
   3. Bulk and weight: Heavy items must be sold directly by the manufacturers to minimise the handling cost.
2. Market-related Factors: In industrial market, direct channels are preferred whereas in consumer market, indirect channels are preferred. Similarly, if a product has widespread demand, a business aiming to increase its sales volume will try to secure as wide a distribution as possible.
3. Miscellaneous Factors: 
   1. Degree of control required: The longer the channel of distribution, the less the control the producer has.
   2. Company policy: Bata sells its shoes directly to customer through its own stores.
   3. Cost factor: The longer the distribution channel, the more costly will be distribution.
   4. Special services: Special services produced by intermediaries, their experience, track record etc.