The choice of an appropriate channel of distribution depends upon a number of factors. Explain any four such factors.
Answers
The selection of a proper channel of distribution is very important. A number of factors influence this decision.
These factors are:
(A) Product Considerations:
The nature and type of product helps in determining a decision about channel of distribution.
(i) Price of Product:
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A high priced product will have less middlemen because the number of buyers will be limited. On the other hand, a low priced product with large number of buyers will require more channels of middlemen to reach the customers. A manufacturer will not be able to deal directly with large number of buyers.
(ii) Weight:
Heavy and bulky products will have to be sold directly to reduce handling costs. Coal, stones, cement, etc. are some of the examples. Light products, on the other hand, will require more middlemen.
(iii) Standardisation:
When a product is standardised it will have universal clientele and may need more middlemen for reaching far off customers. If a product is non-standardised or is produced as per the specifications of the buyer then it cannot have more middlemen.
(iv) Product Nature:
A product of perishable nature cannot have more middlemen because it will have to reach the consumer at the earliest. Bread manufacturers normally have a direct contact with retailers.
(v) After Sale Services:
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A product may require after sale service. The product like motor vehicles, fridges, televisions require after sale service. The channel of distribution will be short for such products.