Question

How to choose a channel of distribution. Give examples.

500 words >

Answer 1

A company distribution channel consists of the series of business, sellers or other intermediaries. Depending on an organization’s business and its product, this series can include wholesalers, retailers, online marketers and shipping companies that help in distributing products directly to consumers. Distributing products is an important function in the organization. A wrong choice of selecting distribution channel will increase the price of the product.
To choose the right channels company will need to consider the following factors.
1. Consider product characteristics- An organization required to consider its product cost, technically, perishability and standardised in selecting the channel of distribution for example If company’s product is perishable in nature like fruits, vegetables and dairy product then the channel of distribution must be short. If the company dealing with technical products like computer, equipment, hardware and software, etc. in these case goods are distributed by a manufacturer’s salesman.
2. Consider Competitor characteristics- The selecting of the distribution channel is also affected by the channel selected by organization competitors in the market. Generally, the firms use the same channel as used by their competitors but some firms can use different channels compared to competitors for example- When all the Smartphones were sold in the retail market by the company whereas some firms used the partnered with Amazon to launch their smartphones on the online portal.
3. Consider market characteristics- This is another factor that influencing the organization’s choice in the selecting channel of distribution. It includes the number of customers, their geographical location, customer’s habits, tastes and frequency of purchase for example- Generally, the number of a buyer is less in the industrial market, a company can select a short channel of distribution.
4. Consider brand position- Marketers required to first decide on how they want to position their product before choosing a distribution channel for example- luxury organic products would not be good to sell through certain distribution channel such as grocery stores. These items should be market in speciality stores where these products will reach the right audience and maintain their brand image.
5. Consider company characteristics - Selecting channel of distribution is also dependent on the company’s financial strength, management expertise and its control policy for example, if a company has a large fund and good management expert team, can create the own distribution channel but if the company has a low fund and expertise has to depend on the third-party distributor.