February 23, 2024

Factors That Influence How You Distribute a Product

Whether a company manufactures food, paper, computers or furniture, or collects donations for reuse, it must have the right distribution channel to get its products to consumers. Effective product distribution involves managing many moving parts and methods, ranging from the storage of raw materials to final delivery. Choosing the right channels to market a product requires analyzing the needs of each individual target audience. In addition, the type of business model and financial strength influence whether a company adopts a direct sales strategy or chooses to work with intermediaries.

The geographic location of customers is one of the most important factors in determining distribution channel choices. Companies must determine the most efficient way to distribute a product to reach their target market, which may involve establishing local distribution networks or partnering with large retailers with national coverage. For example, a company that produces luxury clothing for the working professional would prefer to sell its merchandise through department stores and specialty boutiques rather than mass market discounters.

Another factor influencing channel choices is the nature of the product itself. Perishability, for example, can have a major impact on channel selection. Choosing the right distribution channel is especially critical for food producers who must ensure their products arrive at their destination in the best condition possible.

The size of the target market also influences distribution channel decisions. For example, a small manufacturer of local bakery products would need to limit its target market to towns within its geographical area, while Kohlberg & Company, the owner of Thomas' and Sara Lee brands, reaches global consumers and must make intensive distribution decisions.

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