Importance of choosing appropriate channel members
Success to any manufacturer in the business world is harnessed when their revenues supersede the expenses. One should choose a channel based on the maximization of revenues while minimizing on expenses. Manufacturers should also realize that distribution channels will vary in terms of market coverage, cost, control, motivation and reputation. In some instances, distribution channels might result in competition calling for immense considerations altogether. In this case, the manufacturer has two channels where he may opt to use auto makers or the electronic specialty stores in selling the car stereo system. Either of the channels will come with consequential effects in terms of channel membership and length to the manufacturer.
In evaluating potential intermediaries, there are various factors that should be considered in determining distribution channels. Such criteria may include a calculation of consequent variables that have an association with the cost, commission, competition, negotiation and transparency. Most distributors might bring the need for manufacturers to pay commissions. In this case, manufacturers should consider the kind of competition eminent along with aspects like negotiation. Competitors will set in by offering higher commissions to distributors in a bid to wooing preferences. This may include concessions like stock options, buying allowances and display allowances.
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