Mediquip Ltd. is a company dealing in distribution of medical equipments. The company recently imported 15000 units of sugar testing machines to test the sugar levels without taking blood samples. For deciding the marketing strategy, the Chief Executive Officer of the company called a meeting of the marketing heads of different zones. In the meeting, Sandeep, the North Zone Marketing Head, suggested that since the machines were sophisticated they need to visit hospitals personally, to explain its working to the hospital staff who would be using the machines. He also suggested that additional trained people may be recruited for the same. Himanshu, another Zonal Head, added that since lot of money
had been spent on the import of the machines, the company was short of funds to pay to the additional staff as suggested by Sandeep. Rahul, a newly appointed Zonal Head of South Zone suggested that since the size of the order is not large, a detailed study of the factors determining the choice of channels of distribution is required before making the right choice.
(a) Identify the factors influencing the choice of channels of distribution which were discussed in the meeting.
(b) Also, explain briefly the other consideration to be taken care of in each factor identified in part (a).
(a) Factors influencing the choice of channels of distribution are:
i. Product related factors- As discussed in the paragraph ‘Machines were sophisticated they need to visit hospitals personally to explain its working to the hospital staff who would be using the machines.’
ii. Company characteristics- ‘The company was short of funds to pay the additional staff.’
iii. Market factors- “Size of the order was not large.’
(b) Consideration to be taken care in each factor would be:
i. Product-related factors- The decision regarding the channel of distribution largely depends upon the type of product. In this case, Machines are complex products requiring technical details. Thus, shorter channels of distribution would be more suitable.
ii. Company characteristics- The financial strength of the company determines the channel of distribution that can be used by it. Company which has a good financial strength should opt for Shorter channels of distribution. they can deploy spare funds in distribution and employing salesman, opening a different number of outlets etc. However, in the given case, the company is short of funds and thus would opt for indirect channels of distribution. Similarly, companies with shorter funds can choose longer channel of distribution and companies which have lesser control over their intermediaries can go for longer channel.
iii. Market factors- Factors such as the size of the market, present demand, changing the environment, geographical concentration of buyer also affects the choice of the distribution process.For example the if size of the order is small, the company should go for small channel of distribution and if order size is large then it should go with the larger channel of distribution.
