CHOICE OF DISTRIBUTION CHANNEL Lesson Note
Lesson Objectives
This SS2 Marketing lesson note covers CHOICE OF DISTRIBUTION CHANNEL for First Term, Week 5.
Lesson Note
Lesson Objectives
By the end of the lesson, students should be able to:
Explain the meaning of choice of distribution channel.
Identify the factors that influence the choice of distribution channel.
Explain how each factor affects the choice of a distribution channel.
MEANING OF CHOICE OF DISTRIBUTION CHANNEL
Choice of distribution channel means selecting the best route through which a product will move from the producer to the final consumer.
A producer must choose a channel that will help the product reach customers easily, quickly and at a reasonable cost.
FACTORS THAT INFLUENCE THE CHOICE OF DISTRIBUTION CHANNEL
1. Nature of the Product
The type of product affects the channel chosen. Perishable goods such as bread, milk and fresh fish may require a short channel so that they can reach consumers quickly.
2. Nature of the Market
The producer considers the number and location of customers. If customers are spread across many places, the producer may need wholesalers and retailers to reach them.
3. Cost of Distribution
The producer considers how much it will cost to transport, store and sell the goods. A cheaper channel may be preferred if it can still reach customers effectively.
4. Size of the Business
Large businesses may be able to distribute their products directly, while small businesses may depend on wholesalers, retailers or agents.
5. Financial Strength of the Producer
A producer with enough money may sell directly to consumers and provide transportation and storage facilities. A producer with limited funds may use middlemen.
6. Nature of Competition
The level of competition in the market can influence the channel chosen. A producer may choose a channel that helps the product reach customers faster than competing products.
7. Quantity of Goods Produced
When a producer makes goods in large quantities, wholesalers and retailers may be needed to help distribute them.
8. Geographical Location
The distance between the producer and consumers affects the choice of channel. When consumers are far away, middlemen may be useful in making the goods available to them.
9. Government Regulations
Government rules and regulations can affect how certain goods are distributed.
10. Consumer Buying Habits
The producer considers how customers prefer to buy the product. For example, if customers prefer buying directly from shops, retailers may be important in the distribution channel.
SUMMARY
The choice of distribution channel is the decision a producer makes about the best way to move goods from the producer to the final consumer.
The choice depends on factors such as the nature of the product, market, cost, size and financial strength of the business, competition, quantity produced, location, government regulations and consumer buying habits.
Evaluation
OBJECTIVE QUESTIONS
A distribution channel refers to the route through which goods move from the ________ to the consumer. A. producer B. government C. bank D. employee
Which of the following is a factor that influences the choice of a distribution channel? A. Nature of the product B. Colour of the shop C. Name of the manager D. Age of the salesperson
Perishable products are usually distributed through ________ channels. A. shorter B. longer C. complicated D. indirect only
Which of the following products is most likely to require a short distribution channel? A. Fresh bread B. Furniture C. Cars D. Building materials
The size and location of the market can influence the choice of ________. A. distribution channel B. product colour C. company name D. packaging design only
When a producer sells directly to the final consumer, the channel is called ________. A. direct channel B. indirect channel C. wholesale channel D. retail channel
A producer who sells goods through a wholesaler and retailer is using a/an ________ channel. A. indirect B. direct C. personal D. single
The financial strength of a producer can affect the choice of distribution channel because it determines the producer’s ability to ________. A. distribute goods directly B. change the weather C. manufacture consumers D. prevent competition
Which of the following should a producer consider when choosing intermediaries? A. Their ability to distribute the products effectively B. Their favourite colour C. Their family size D. Their place of birth
One major reason for choosing an appropriate distribution channel is to ensure that goods reach consumers at the ________. A. right time and place B. highest possible price C. producer’s home D. factory only
Evaluation Questions
1a. What is a distribution channel?
1b. State five factors that influence the choice of distribution channel.
2a. What is meant by choice of distribution channel?
2b. Explain how the nature of a product affects the choice of distribution channel.
3a. How does cost influence the choice of distribution channel?
3b. Explain how the financial strength of a producer can affect the choice of channel.
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