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Issues In Establishing Distribution Channel Arrangements

Issues in Establishing Distribution Channels Assignment / Homework Help
A manufacturer must conduct a thorough market research before deciding upon the distributive method he wants to employ. Like all marketing decisions this too requires lot of thought and study. There are various factors which determine his choice of a distribution system. These factors can be grouped into two. Factors can be either related to marketing decisions which determine a distribution channel or the kind of relationship that exists between channel members.

  • Marketing Decision Issues

  • Channel Relationship Issues
1. Marketing Decision Issues
Various marketing decisions regarding the product help in establishing its distribution channel. For instance the following factors:

  • Product Issues
  • The nature of the product often determines the distribution option. Various products which need to be distributed are very delicate and fragile for instance flowers. Here the marketer will choose an appropriate channel on the other hand a marketer selling tough or durable products like steel beams will have other kinds of distribution channels in mind.

  • Promotional Issues
  • Apart from issues like whether a product needs special handling or not the marketer also needs to keep in mind how the product needs to be promoted before he chooses a distribution channel for it. Certain products need extensive salesperson-to-customer contact for instance automobile purchase. On the other hand a product like bread will need a different distribution channel as its buyers require no help from salesmen.

  • Pricing Issues
  • The price at which the marketer wants to sell his product is another factor to be kept in mind before choosing a distribution system. The number of resellers involved in the distribution channel affects the final price of the product. This is so because each channel member tries to make some profit for their contribution to the sale of the product. Therefore more the number of channel members the marketer has to increase the product price to maintain his profit and the distribution channel.

  • Target Market Issues
  • The primary motive of utilizing a distribution channel is to ensure the products reach the end user. The nature of the target market is another important point to consider while deciding upon the distribution channel. In this regard it is beneficial to determine the level of distribution coverage needed to effectively meet customer’s needs. Distribution coverage is measured in terms of the intensity by which the product is made available to the end user.

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