(b) Explain five factors that can determine the type of channels of distribution to be used by a company.
Explanation
(a) IMPORTANCE OF MIDDLEMEN,
(i) Middlemen help to gather the products of many producers and sell-to the final consumers.
(ii) They help to sort products into various groups in terms of quantity, type and size,
(iii) Middlemen buy in large quantities and sell in small quantities to the consumers,
(iv) The middlemen can can repackage broken bulk into smaller units for the convenience of customers.
(v) Middlemen help the producers in selling their products.
(vi) They provide warehouse facilities to the producers.
(vii) Middlemen provide financial assistance to the producers and sometimes sell on credit to consumers,
(viii) Middlemen serve as link between producers and consumers,
(ix) Middlemen buy products and transport them closer to the customers.
(x) They provide information to both the producers and consumers.
(xi) They help in product promotion.
(b) FACTORS DETERMINING CHANNELS OF DISTRIBUTION,
(i) The nature of the product, that is the size, weight and perishability of a product determine the choice of a channel.
(ii) The type and characteristics of consumers - A producer with large market size tends to use middlemen", reach the consumers. If the market is concentrated in a particular geographic area, the producer uses direct channel but if the consumers are disperse the producer uses indirect channel.
(iii) Competition -The choice of a channel may determined by competitive considerations Such as the need to reach the same market serviced by competitors or rivals,
(iv) Availability of Middlemen -The availability of able and: willing resellers especially with respect to the kind of product and the types of functions needed by the producer also an influencing factor.
(v) Desired level of channel control - To check unethical practices of middlemen and to have control over information gathering, retail advertising. store display and prices, a company may choose to have few a middlemen and a short channel as possible
(vi) Marketing Environmental characteristics - environmental factors such as economic, Social socio-cultural, political, technological. etc determine choice of channel to be used.
