Distribution Decisions

Factors in Creating Distribution Channels

Like most marketing decisions, a great deal of research and thought must go into determining how to carry out distribution activities in a way that meets a marketer’s objectives.  The marketer must consider many factors when establishing a distribution system.  Some factors are directly related to marketing decisions while others are affected by relationships that exist with members of the channel.

Next we examine the key factors to consider when designing a distribution strategy.  We group these into two main categories: marketing decision issues and channel relationship issues.  In turn, each of these categories contains several topics of concern to marketers.

Marketing Decision Issues

Distribution strategy can be shaped by how decisions are made in other marketing areas. 

Product Issues

The nature of the product often dictates the distribution options available especially if the product requires special handling.  For instance, companies selling delicate or fragile products, such as flowers, look for shipping arrangements that are different than those sought for companies selling extremely tough or durable products, such as steel beams.

Promotion Issues

Besides issues related to physical handling of products, distribution decisions are affected by the type of promotional activities needed to sell the product to customers.  For products needing extensive salesperson-to-customer contact (e.g., automobile purchases) the distribution options are different than for products where customers typically require no sales assistance (i.e., bread purchases).

Pricing Issues

The desired price at which a marketer seeks to sell their product can impact how they choose to distribute.  As previously mentioned, the inclusion of resellers in a marketer’s distribution strategy may affect a product’s pricing since each member of the channel seeks to make a profit for their contribution to the sale of the product.  If too many channel members are involved the eventual selling price may be too high to meet sales targets in which case the marketer may explore other distribution options.