Company Characteristics Factors Determining Choice of Channels
Company Characteristics: The significant company characteristics affecting the choice of channels of distribution include the financial strength of the company and the degree of control it wants to hold on other channel members. The nature, size and objectives of the firm play an vital role in channel decisions. Direct selling involves lot of funds to be invested in fixed assets say for starting own retail outlets or engaging great number of sales force. Indirect selling through intermediary does not involve deployment of huge funds on these aspects. Thus, if the firm has abundance of funds it may go for direct distribution. The competence and experience of management exercises manipulate on channel decision. If the management of a firm has adequate knowledge and experience of distribution it may choose direct selling.
If spare funds are not obtainable, it may go for indirect channels. Similarly if the management wants to have better control on the channel members, short channels are used but if the management do not want more control over the middlemen, it can go in for longer channel or large number of intermediaries.