Marketing Decision Issues in Channels

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

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.

Target Market Issues

A distribution system is only effective if customers can obtain the product. Consequently, a key decision in setting up a channel arrangement is for the marketer to choose the approach that reaches customers in the most effective way possible. The most important decision with regard to reaching the target market is to determine the level of distribution coverage needed to effectively meet customer’s needs. As we will see next section, distribution coverage is measured in terms of the intensity by which the product is made available.