When a manufacturer is choosing a distribution channel, there are several factors to consider. Here are five important factors that a manufacturer should take into account:
- Product nature: The nature of the product plays a crucial role in determining the appropriate distribution channel. For perishable products that can go bad quickly, it is often more suitable to sell directly to consumers to avoid delays that may result in losses. Similarly, bulky products may require direct selling to reduce transportation and stock handling costs.
- Nature of the market: The characteristics of the market also influence the choice of a distribution channel. If the market is concentrated in one area, direct selling is usually more appropriate. On the other hand, if the market is widely spread, a longer channel of distribution may be preferred to reach a broader customer base.
- Costs: The cost of marketing and distribution is another significant factor to consider. If the manufacturer faces high marketing and distribution costs, it may be more practical to dispose of goods through intermediaries or middlemen who can help reach consumers more efficiently.
- Lack of facilities/skills: Manufacturers may lack the necessary facilities or expertise to distribute their products effectively. In such cases, they may rely on intermediaries to help them reach consumers and overcome logistical challenges.
- Government policy: Government regulations and policies can also impact the choice of a distribution channel. Manufacturers must ensure that they comply with any requirements or restrictions set by the government. For example, certain products may require middlemen to be recognized by relevant government bodies before they can distribute them.
Considering these factors can help manufacturers make informed decisions when selecting a distribution channel. It is important to evaluate the unique characteristics of the product, market, costs, available resources, and government policies to ensure an efficient and effective distribution strategy.
