3. Product Factor
a) Sizes & weight of the product – If the size, weight & price of the product is very large, then direct supply should be there as it will lead to convenience & low transportation cost & there will be less chances of damage during transportation. For eg. Big industrial products like boilers, grinders etc.
On the other hand, if size & weight of product is not so big, a long chain can be as in case of Fast Moving Consumers Goods (FMCG)
b) Unit Value – If the per unit value of product is less, say for eg. salt, sugar, wheat, rice etc. then the distribution channel may be large as consumption of it is comparatively more. But, if the unit price is very high, for eg. gold, silver, then a smaller distribution channel is required.
c) Stability of the product – If the product is of perishable in nature, i.e. it becomes useless after a specific period of time, like milk, butter, cheese, fish, etc. then a small distribution channel is required to ensure prompt delivery, but if the product is stable in nature like soaps, shampoo etc, then the distribution channel can be long.
d) Standard v/s Specific products – Some distributors only want to sell standard & famous products, so if the product is standard in nature, manufacturer has to use these types of distributors or middlemen.
But, if the product is specific one, say : engineering & medical books, which are not kept by all book-sellers, so in that case, these specific dealers on middlemen have to be chosen.
e) Technical nature of product – If the product is of technical nature then an effective after sales service is also to be provided. So, in this case, either direct marketing or marketing through authorized dealer should be used, on only then company can use the services of its services- engineers more effectively. For eg., in case of electronic item TV’s and Refrigerators, outlet is authorized dealers, so if after sales service is required customers may contact the dealer, which passes it to the company for final service.
f) Expert of product line – The manufacturer has to decide that he should take the services of a wholesaler or retailers or both and then accordingly decide to increase or decrease the product line. For eg., if the manufacturer is manufacturing soaps, then he can increase the product line by incorporating shampoos also, as the distribution channel will be the same.