Page 213 - DMGT408DMGT203_Marketing Management

Marketing Management/Essentials of Marketing

Notes managers should identify what characteristics distinguish better intermediaries. Selecting
marketing channels can be a complicated process, particularly if part of the channel is outside
the producer’s direct control. In addition, there is not an endless supply of available intermediaries
sitting around waiting for producers to give them a call. The elements that managers examine as
they define channel strategies can be grouped into market factors, product factors and producer
factors.

Market Factors

Analyzing and understanding the target market is the first step in selecting marketing channels.
There are several factors that an analysis of the market should explore, ranging from customers
to types of competitive presence.
1. Customer Preferences: The channel, which is more preferred by customers.

2. Organizational Customers: Organizational customers frequently have buying habits that
are different from those of other consumers.
3. Geography: Customer location is another important factor, determining the type of channel
to be used.
4. Competitors: Often a good channel choice is a channel that has been overlooked or avoided
by competitors. In some cases, the marketer may try to duplicate his competitors’ channel
in order to have his products end up on store shelves meant for competitors’ products.

Product Factors

Even products that end up at the same retail location may need different intermediaries earlier
in the channel. Following are the product related factors that influence the channel selection
decision.
1. Life Cycle: A product category’s stage in the life cycle can be an important factor in selecting
a channel, and channels may have to be adjusted over time. Customers require less support
once the product has established itself.

2. Product Complexity: Some products are so complicated and require so much support that
producers need to stay closely involved. This indicates either a direct sales force or a
limited number of highly qualified intermediaries. Scientific equipments, jet aircraft,
nuclear reactors, pharmaceuticals, and computers are products whose complexity affects
the way in which they are marketed.
3. Product Value: Value of the product also affects distribution channel choices. Items with
low cost and high volume are usually distributed through large, well-established
distribution networks, such as grocery wholesalers.
4. Product Size and Weight: A product with significant size and weight can face restricted
distribution channel options, particularly if it is also of low value.
5. Consumer Perceptions: The perceptions customers have of products and producers also
play a role in channel decision.

6. Other Factors: Depending on the product in question, other factors may enter into the
decision as well. Some of these include whether a product is fragile or perishable and
whether or not it requires significant customization.

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