Some of the factors to consider while selecting a channel of distribution are:

(1) The Nature of the Product (2) The Nature of the market (3) The Nature of
Middlemen (4) The nature and size of the manufacturing unit (5) Government
Regulations and Policies and (6) Competition.
Distribution of goods is as important as production. Existence of an
organisation largely depends upon a proper and well organised system of
distribution. It is therefore, necessary than utmost attention should be paid in
selecting a channel of distribution.
Various constituents of the marketing mix like promotion etc., are closely
related to the channels of distribution. A wrong choice of distribution channel
ultimately increases the price of the product. Deciding a proper channel of
distribution is not an easy task. It involves a careful study and consideration of
many factors stated below.

(1) The Nature of the Product:

These factors include physical characteristics of a product and their impact on
the selection of a particular channel of distribution.
Various factors under this category are:
(a) Perishability:
Products which are perishable in nature are distributed by employing a shorter
channel of distribution so that goods could be delivered to the consumers
without delay. Delay in distribution of these products will deteriorate their
quality.
(b) Size and weight of product:

Bulky and heavy products like coal and food grains etc. are directly distributed
to the users involve heavy transportation costs. In order to minimise these
costs a short and direct distribution channel is suitable.
(c) Unit value of a product:
Products with lesser unit value and high turnover are distributed by employing
longer channels of distribution. Household products like utensils, cloth,
cosmetics etc. take longer time in reaching the consumers.. On the other
hand, products like jewellery having high product value are directly sold to the
consumers by the jewellers.
(c) Standardisation:
Products of standard size and quality usually take longer time by adopting
longer channel of distribution. For example, machine tools and automobile
products which are of standard size reach the consumer through the
wholesalers and retailers. Un-standardised articles take lesser time and pass
through shorter channels of distribution.
(e) Technical Nature of Products:
Industrial products which are highly technical in nature are usually distributed
directly to the industrial users and take lesser time and adopt shorter channel
of distribution. In this case after sales service and technical advice is provided
by the manufacturer to the consumers.
On the other hand, consumer products of technical nature are usually sold
through wholesalers and retailers. In this manner longer channel of
distribution is employed for their sales. After sales services are provided by

the wholesalers and retailers. Examples of such products are televisions,

scooters, refrigerators, etc.
(f) Product Lines:
A manufacturer producing different products in the same lines sells directly or
through retailers and lesser time is consumed in their distribution. For
example, in case automobile rubber products this practice is followed. On the
other hand, a manufacturer dealing only in one item appoints sole selling
agents, wholesalers and retailers for selling the product. For example, in case
of Vanaspati Ghee longer distribution channel in undertaken.

(2) The Nature of the market:

This is another factor influencing the choice of a proper channel of distribution.
In the words of Lazo and Corbin Marketing managements select channels on
the basis of customer wants-how, where and under what circumstances. The
number of buyers of the product affects the choice of a f channel of
distribution.
Following factors are considered in this regard:
(a)Consumer of industrial market:
In case of industrial markets, number of buyers is less; a shorter channel of
distribution can be adopted. These buyers usually directly purchase from the
manufacturers. Marketing intermediaries are not needed in this case.
But in case of consumer markets, where there are a large number of buyers, a
longer channel of distribution is employed. Distribution process cannot be
effectively carried out without the services of wholesalers and retailers.
(b) Number of prospective buyers:

If the number of buyers is likely to be more, the distribution channel will be

long. On the other hand, if the number of consumers is expected to be less,
the manufacturer can effectively sell directly to the consumers by appointing
salesmen.
(c)Size of the order:
If the size of the order placed by the customers is big, direct selling can be
undertaken by the manufacturer as in case of industrial goods. But where the
size of the order is small, middlemen are appointed to distribute the products.
(d) Geographic concentration of market:
Where the customers are concentrated at one particular place or market,
distribution channel will be short and the manufacturer can directly supply the
goods in that area by opening his own shops or sales depot. In case where
buyers are widely scattered, it is very difficult for the manufacturer to establish
a direct link with the consumers, services of wholesalers and retailers will be
used.
(e) Buying habits of customers:
This includes tastes, preferences, likes and dislikes of customers. Customers
also expect certain services like credit and personal attention and after sales
services etc. All these factors greatly influence the choice of distribution
channel.

(3) The Nature of Middlemen:

Marketing intermediaries are vital components in the distribution of goods.
They greatly influence the marketing of goods.

Important factors relating to the selection of a particular middleman are

explained as under:
(a) Cost of distribution of goods:
Cost of distribution through middlemen is one of the main considerations to be
taken into account by the manufacturer. Higher cost of distribution will result in
the increased cost of product. The manufacturer should select the most
economical distribution channel.
In finalising the channel of distribution, services provided by the intermediaries
must be kept in mind. It may be pointed out that the manufacturer can select
an expensive marketing intermediary because that may ensure various
marketing services which cannot be offered by others.
(b) Availability of desired middlemen:
Sometimes desired middlemen may not be available for the distribution of
goods. They may be busy in dealing with the competitive products. Under
such circumstances the manufacturer has to make his own arrangements by
opening his branches or sales depots to distribute the goods to the
consumers.
(c) Unsuitable marketing policies for middlemen:
The marketing policies of the manufacturer may not be welcomed by the
middlemen the terms and conditions may not favour the middlemen. For
example, some wholesalers or retailers would like to act as sole selling agents
for the product in a particular area or region.
(d) Services provided by middlemen:

The manufacturer should select those middlemen who provide various

marketing services viz, storage, credit and packing etc. At the same time the
middlemen should ensure various services to customers.
(e) Ensuring greater volume of sales:
A manufacturer would like to appoint that middlemen who assure greater
sales volume over the long run.
(f) Reputation and financial soundness:
In appointing middleman, the manufacturer must take into consideration the
financial stability and reputation of the middleman. A financially sound
middleman can provide credit facilities to customers and make prompt
payment to the manufacturer.

(4) The nature and size of the manufacturing unit:

The nature and size of manufacturing unit has a great impact on the selection
of a distribution channel.
The various considerations in this regard are as follows:
(A) Manufacturer Reputation and Financial Stability:
Reputed and financially sound manufacturing concerns can easily engage
middlemen as compared to lesser reputed and newly established units.
Usually a manufacturing unit having a sound financial base can easily
distribute the goods without appointing middlemen by opening their own sales
depots and branches. A financially weaker unit cannot operate without the
help of middlemen.
(B) Ability and Experience of the Undertaking:

Industrial undertakings having ample marketing ability and experience can

effectively manage their distribution activities themselves. They have lesser
dependence on undertaking intermediaries. On the other hand, marketing
units possessing lesser marketing ability and experience depend more on
middlemen for the distribution of goods.
(C) Desire for Control of Channel:
A manufacturer may resort to a shorter distribution channel in order to
exercise effective control over distribution. This is suitable in case of
perishable goods and is helpful in establishing direct link between the
manufacturer and the consumer. The cost of distribution may be more by
adopting such a channel of distribution.
(D) Industrial Conventions:
Industrial conventions followed influence the selection of distribution channel.
If a particular mode of distribution is adopted in an industry, the same will be
followed by every manufacturing unit in that industry in distribution their
products.
(E) Services Provided By the Manufacturers:
The selection of marketing intermediaries is also influenced by various
services provided by the manufacturer. These services include extensive
advertisement for the product, after sales services and facilities of credit. The
manufacturers providing these services can easily avail the services of
reputed retailers and wholesalers.

(5) Government Regulations and Policies:

Government policies and regulations also influence the choice of distribution

channels. The Government may impose certain restrictions on the wholesale
trade of a particular product arid takeover the distribution of certain products.
All these restrictions have a direct impact in selecting the channel of
distribution.

(6) Competition:
The nature and extent of competition prevalent in a industry is another
deterimental consideration in selecting a distribution channel. Different
manufacturers producing similar products may employ the same channels of
distribution.