Factors which Influence a manufacturer in his choice of the channel of distribution for his product
The manufacturer
A channel of distribution for a product is the route taken by the title of the goods as they move from the producer to the ultimate consumer. A channel always includes the producer and the consumer. It may at times include middle men namely the wholesalers and the retailer who are also involved in the titled transfer. The channel does not include such firms as banks, transport and other non middle men institutions which render a marketing services but play no major role in nogotiating purchase and sales.
In choosing a channel of distribution a manufacturer will be influenced by many factors but he would be wise enough to choose the channel that will help him to make a reasonable profit at a particular time depending on the commodity in question.
One channel leads directly from the manufacturer to the final consumer without anybody intervening. The maker himself takes the goods straight to the homes of his customers or he allows consumers to come direct to his premises and buy. This occur where the goods dealt in are highly perishable such as milk, fish or bread. In doing this the manufacturer will also be influenced by the amount of capital available for the purchase of delivery vans and for paying sales man.
Direct dealing between manufacturer and consumer may also take place when the goods have to be made to suit the customers special requirements, for example a tailor make a suit and sells it direct to a customer. In the same way a computer manufacturer has to supply a special model direct to the orders of his customers.
Heavy goods like furniture, refrigerator and washing machines cannot be taken around the streets by salesman so it is usual for retailers to come between the manufacturer and the consumer. The alternative is for the manufacturer to open his own showroom where the goods can be displayed if he can so afford.
A manufacturer may decide to open his own retail shops if he decides to cut off the wholesalers and the retailer. The disadvantages here is that he won't have adequate time to concentrate on production and specializes in it. He will also have to provide his own warehouse involving further cost. At certain times, however, the buyer might require advise as to how to use certain products. This often happens when people need advice on the use of drugs from chemical manufacturers.
Some manufacturers find it expedient to allow Specialist such as wholesalers to grade, advertise and find markets for their products. In this case one will expect to see the title of goods pass from manufacturer through the wholesalers, retailer, and final cunsumer. This saves the manufacturer a lot of work and the necessity of finding extra capital for opening shops. If, on the other hand, a manufacturer finds that retailers are not pushing his product because they are selling similar product produce by competitors, he may compel a particular retailer to sell only his brand. The retailer shop will, in this case , be referred to as a "tied shop". The manufacturer himself will undertake to advertise the product to the public. Examples of tied retailers are the owners of petrol stations the great majority of whom sell only one brand.
Whether he sells direct to consumers or through wholesalers and retailers, manufacturer will always be influenced by the need to have a lot of storage space and as such will have to build his own warehouse at suitable points in order to serve his customers efficiently.
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