How do the markets related factiors affect the choice of channels of distribution?
Answers
Answer:-
The following are the market related factors to be considered:
a. Customers:
The ultimate purpose of any channel of distribution is to distribute the goods to the customers. Therefore the requirements and the nature of the customers should be considered while deciding the channel of distribution.
If the customers are widely scattered the channels must be in a position to reach them out effectively. This requires appropriate channels but if the customers are not widely scattered smaller channels would be sufficient. If the customers are very large in number such as individuals, very wide channels of distribution will be necessary, but if the customers are small in number and purchase in large quantities such as the industrial purchasers, small channels or even direct distribution will be sufficient.
b. Competition:
One has to consider the channels of distribution arranged by the competitors. This choice represents the wisdom and experience of the competitors. It also means that the competitors have been successful in using such channels over the long run. A company can adopt such channels of distribution if found suitable to itself. Unless there are compelling reasons, a company should not try to change the pattern of distribution as compared with that of the competition.
c. Existing Channels of Distribution:
One has to make study of the existing channels of distribution. The functions performed by these channels, their strengths and weaknesses, their suitability and such other factors affect the choice of channels. Their relative advantages must also be studied.