c) State four factors to be considered by a producer in choosing an effective channel of distribution
Explanation
(a) Transportation by pipeline is a means of moving liquid and gases from one place to another.
(b) Benefits of transport by air:
Air transport is the fastest means of transportation.
The danger of damage to delicate, fragile and perishable goods is reduced to the barest minimum.
It requires less handling of goods, thereby reducing the incidence of pilfering.
The rate of accidents is minimal.
It is a more comfortable means of transportation, hence suitable for long journeys.
The cost of insuring goods conveyed by air is reduced because of the shorter time the insurance company is at risk.
It costs nothing to provide/maintain air routes.
Markets are extended as distant markets are easily reached.
(c) Factors to consider in choosing an effective channel of distribution:
Nature of the product: perishable goods need shorter channels of distribution.
Competitor’s channels: producers should consider channels used by other producers.
Cost of the channel: the cost of using a particular channel of distribution should be considered.
Market size: the number of potential customers will affect the choice of the channel used.
Financial resources of the producer: the stronger the producer is financial, the lesser the need is for middlemen, hence the need for a short channel.
Geographical concentration of customers: if customers are concentrated in a particular area, a short channel is required. If customers are widely scattered, a longer channel will be preferred.
Size of the order: the size of the order will be considered in choosing a channel of distribution.
The unit value of a product: expensive goods require direct distribution to customers.
