• Important decision related to physical distribution of goods
• Make product available.
• Channels of Distribution:
It refers to people or middlemen who help in distributing
of the goods.
• Without these middlemen its impossible for producer to
make goods available to customers.
• Some Examples of middle men :
whole seller, retailer etc…
Types of Distribution Channel:
In this type of channel goods/products are sold
by producer directly to consumer.
Here goods are sold with help of middle men.
Types of Indirect Channel:
1. One level
2. Two level
3. Three level
Product Related Factors:
• Value : Price is an essential component, if it is
costly companies generally should follow Direct
or one level channel of distribution.
• Complexities: If product is complex, and requires
high level of technical knowledge then direct
level should be used.
• Nature: Customised product requires direct
channel. Standard product can be sold by indirect
• Perishable products require direct channel, while
non perishable requires indirect channel.
Company Related Factors:
• Finance: If company is financially sound then
only they should try direct channel. If
company is financially unsound they should
try indirect channel.
• Degree of Control: If company wants control
over the selling and price of its product then,
they should go for Direct Channel.
• The type of channel selected by competitor
companies affects the selection of channel. As
a company we may select the same channel as
selected by competitor or sometimes the
businessmen prefers not to select the channel
selected by competitor. For example: if
competitor has chosen to sell detergent using
direct channel, businessmen can choose to
sell it using indirect channel.
Market Related Factors:
• Nature of market: In Industrial market direct
selling is preferred. Whereas in consumer market
distribution channels are appointed.
• Size of the market: Large number of consumers
require indirect channel, but if number of
consumers are less direct channel is preferable.
• Geographical : When buyers are concentrated in
limited area direct selling is preferred.
• Quantity Purchased: If order size is large then
direct supply from firm is preferred.
• Other factors which affects this decision
include environmental factors such as trade
policy, economic policy etc…
• During Boom period indirect channel is used.
• During period of recession direct channel is
used to make goods delivered to consumers in