Why choose different channels of distribution?
There are different reasons why businesses choose specific channels of distributionThe channels of distribution are the different ways in which a product gets from the producer to the end consumer.:
- finance
- image
- legal restrictions
- product
- stage of the product life cycle
- size
Finance
Companies may not have the money required to set up distribution directly to the consumer and would therefore be reliant on a wholesaler or retailers to distribute their products.
Image
Where a product is sold can influence how it is perceived. Premium products will only be sold at certain retailers that are able to maintain the quality image of the product.
Legal restrictions
Some products such as alcohol and medicines can only be sold through licensed premises.
Product
The type of product being sold will affect which channels of distributionThe channels of distribution are the different ways in which a product gets from the producer to the end consumer. is chosen:
- A perishable product such as milk needs to get to the consumer quickly, so a shorter channel of distribution is required.
- A highly technical or consumer-specific product such as double-glazed windows or a computer system for a business will need to come directly from the manufacturer.
Stage of the product life cycle
Products at the maturity stage of the product life cycleThe theory that a product moves through different stages: introduction, growth, maturity, and decline need to be widely available through many retailers whereas a product at the introduction stage may only be available in a small number of retailers or direct from manufacturer.
Size
If a product has a large market, such as popular brands of food or drink, the company will need to use wholesalers and retailers to ensure that demand for the product is met.