Mohit is manufacturing beauty products under the brand name of Myself. He has the ambition to control the market of his product and has chosen a shorter channel of distribution. Identify the factor, that he has considered, while choosing his network.
Answer & explanation
Correct answer: option 4
The correct answer is option (4) - Company related.
Considerations related to manufacturer/company: Considerations related to manufacturer are given below:
1. Goodwill: Manufacturer’s goodwill also affects the selection of channel of distribution. A manufacturer enjoying good reputation need not depend on the middlemen as he can open his own branches easily.
2. Desire to control the channel of distribution: A manufacturer’s ambition to control the channel of distribution affects its selection. Consumers should be approached directly by such type of manufacturer. For example, electronic goods sector with a motive to control the service levels provided to the customers at the point of sale are resorting to company owned retail counters.
3. Financial strength: A company which has a strong financial base can evolve its own channels. On the other hand, financially weak companies would have to depend upon middlemen.