Selecting a distribution channel is a vital ingredient of the Marketing Mix. What factors affect such decisions?
Firstly, the actual product in question is a factor. If the product is a perishable, then the supply chain has to be quick and preferably local. A direct distribution straight from manufacturer to the company would be ideal.
The quality of the product is also important. If the product is high quality then it is unlikely it will be bought from wholesalers who buy in bulk and arrange into manageable quantities for retailers. Again buying direct from a quality manufacturer would be ideal.
If other parts of the distribution channel are unreliable (the supply chain), then it may be wise to avoid them in future. You may have a wholesaler who cannot satisfy your lead times or the quantities you need, so you may have to look elsewhere.
The capital/finance and resources of the firm will be a factor also. If the company has limited resources and finance then they will have to look for the best deal, which may include moving online and selling as an etailer. This would reduce overheads and labour costs.
There are other issues involved also such as legal requirements, which affect distribution as certain goods may have to be packaged in a certain way or similar to perishables they have a sell by date.
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