factors affecting channel choice

7/28/2019 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.

factors affecting channel choice

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