Designing Distribution Channels

When designing a distribution channel, the considerations include identifying the consumers. In a distribution channel targeting homogeneous consumers, the consumers have similar requirements. The distribution channels should, therefore, have similar features while diversified consumer needs may require distribution channels that have varied features. Product information is critical to the design of distribution channels. Consumers need specified information relating to the products that they require. The product can have complex, technical aspects or may be new to the market, meaning that the consumer may require a lot of information on the product. Products also can have dynamic technological components, which mean that the components keep changing with time (Amato & Amato, 2009).

Certain product may require to be customized to meet the consumer requirements. Such products require distribution channels that have experts who can perform the required modifications. Consumers also require products that have high quality standards especially, if the products in question are components that may be required to process other products (Rabinovich, Knemeyer, & Mayer, 2007). The distribution channel can also be determined by the size of the product required by the consumers. There are products that have extensive uses to their consumers and are normally lowly priced. This implies that the consumers require such products in large volumes, and the profit margin for these products is low. For such products, the distribution channels should be designed to handle large product volumes. Since the low profits accrue, producers should use multiple distribution channels to lower operation costs. This is because dealers or the intermediary firms that producers engage to move their products to the consumers, often have greater knowledge of the market.

This knowledge of the market needs may help the intermediary firms to have more flexibility when responding to the consumer requirements. They have the ability to easily slash their costs more efficiently than producers. However, when producers have to use intermediary firms they lose control over their products (Campbell & Frei, 2009). Other factors that can determine the design of the distribution channel include the items produced require other complementary products to be available. In such a case, a manufacture should ensure that the distribution channels employed can easily avail the complementary products.

In addition, there are other products that require installation, maintenance, repair or warranty among other services after consumers purchase the products. This means that experts may be required to perform these functions. The distribution channel used should provide the required expertise to ensure the consumer satisfaction. The producers should, therefore, move such products directly to their consumers or identify dealers or agents with the required expertise. In order to be able to perform the required tasks, the consumer may need to enjoy the product. Distribution channels have logistical requirements such as transportation and product should also be a factor in determining the distribution design. Distribution channels should be structured depending on the intensity of the product requirements. Those awfully bulky products or highly technical products should be distributed directly to their consumers.