Download - Factors Affecting Channel Choice
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BY:
Manoj Kumar Mishra
M.B.A. 2ndSEMESTER
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CHANNEL- A CONCEPT
A Marketing channel is a set of
organizations involved in theprocess of making product or
services available for use or
consumption.
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FACTORS-:
Marketing Factor
Manufacture Factor Product Factor Competitive Factor Middleman Factor or Intermediary Factor
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Marketing Factors
Number of consumer
Location Purchase Pattern
Market Size
Product Order Size
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Number of consumer
When the number of consumer is large in
size as it happens in the case of FMCG, themanufacturer opt for a relatively indirect
channel because direct channelization would
involve enormous distribution cost. And if
number of consumer is limited, the marketingcompany will opt direct channel.
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Location
Where consumer are concentrated in a small
geographic location it is always advantageousto opt for a direct channel owing to the lower
cost of selling them direct. But when consumer
are concentrated over a wide area with a thin
density of population then indirect selling wouldbe the right choice.
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Purchase Pattern
where consumer purchases are frequent and
small in size, it is advantageous to select anindirect channel because it facilitates maximum
sales exposure. And if consumer purchases
goods in large quantity with less frequency,
then direct channel will be moreadvantageous .
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Market Size
Marketing size dictate the nature of channel
which is selected by organization. If marketsize is large we need intermediaries and if
market size is small then direct marketing will
be more useful.
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Product Order Size
If product order size is high in quantity then
producer himself attend. He will not want toloose opportunity.
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Product Factors
Industrial / Consumer product
Perishable Nature Seasonality
Technicality
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Industrial / Consumer Product
When the product being manufactured and
sold is industrial in nature, direct channel isuseful because of the relatively small number
of customers need for personalized attention,
customer training requirements and after
sale servicing.
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Perishable Nature
When products are perishable nature, like
milk, dairy products bread and meat, etc., it isuseful to opt for direct channel
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Seasonality
when product sale is subject to seasonal
variations like woolen textile in India. In suchcases intermediaries are seldom prepared
undertake the function of inventory carrying
and as consequence manufacturer build up
indirect distribution channels.
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Technicality
When a product is very technical and complex
like computers business machines etc. thedirect channel is relatively more useful.
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Manufacturer Factors-:
Manufacturer may lack financial and
managerial resources to take on channeloperations. If manufacturer is producing a wide range
of products then it will effect the selection
of channel choice. Manufacturer is newly entered or he is oldor established in market both are factorswhich are important in selecting a
channel.
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Competitive Factors-:
Channels which are less expensive are
generally preferred. Marketing policies and strategies are also
a factor to consider for selection. Alternative distribution channel may be
used as a means of attaining competitiveadvantage
Competition controls channel ofDistribution.
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Middleman Factors-:
Availability of Middleman Attitude of Middleman Services Provide by Middleman Market reputation and goodwill of
middleman
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THANK YOU.