Question

what three factors should be considered when designing a market channel

Answer 1

The three main factors which must be kept in mind while designing the distribution channels are as below:-

(1) The Nature of the Product:

This is the factor which mainly deals with the physical traits of the product and their influence on the selection of a certain marketing channel.

Various factors under this category are:

(a) Perishability: Greater the perishability, smaller should be the length of channel. Any delay in distribution will ruin the product.

(b) Size and weight of product:

Greater the product weight and size, shorter should be the length of the channel. Cost minimization can be achieved through the direct distribution.

(c) Unit value of a product:

Greater the turnover and lesser the unit value, longer channels are used.

(d) Technical Nature of Products:

Industrial products having technological aspect are to be distributed directly while consumer products having lesser technological dimension can be used by longer distribution channel.

2) The Nature of the market:

The selection of the market channel is also affected by this factor. The total number of customers has a direct influence on the selection of distribution channel.

The different factors to be considered as below:-

(a)Consumer or industrial market

(b) Number of prospective buyers

(c) Size of the order

(d) Geographic concentration of market

(e) Buying habits of customers

3:- Competition:

The one of the most important aspects of selecting the distribution channel is the nature and the level of the competition prevailing in hat industry. The similar type of distribution channels can be used by the various producers producing identical products.

Greater the competition, extensive will be the distribution.