Question

1. list specific product, market, and competitive conditions that are best suited for direct channel distribution.

2. list specific product, market and competitive conditions that are best suited an indirect channel distribution.

Answer 1

1. Direct channel distrbution involves selling direct to the end consumers without using any intermediaries. This is a suitable mode of operation for the products which have defined and well known consumer segments, that are easily accessible for the manufacturer,and the order quantity to these consumers can be easily managed with help of a well developed logistical system, and an information system that enables unintrrupted communication with customers. It can be through a combination of technology and agile physical processes that can put the supply chains into action. The system is useful when the company has capability to serve customers directly as per their needs and deals in a product that is not feasible to sell through intermediaries. It is suitable for products like mobile phones / electronic goods which have very high competition, high customer awareness and availability of effective platforms of reaching right people through technology, enable purchase, deliver them in shortest lead time and provide effective after sales sevice as desired.

2. Indirect mode of distribution involves a number of channel intermediaries between the manufactuere and customer. This mode is used when the products are of mass consumption or such a nature that it is not possible for the company to serve a huge number, form and variety of customers divided in different segments, owing to resource constraints and it needs to take help of intermediaries to deliver the right product to the customer at the right time and place. The market for such products is unstructured and has many segments that buy the goods in different quantities and spread across a huge geography. The competition is high and the market is so volatile  that the manufacturer needs consistent input from the market to make supply strategies and deliver the right product at the right time and in right quantity to ensure profitability and competitiveness. The example is daily bread which can be sold through a number of intermediaries.