Directorate of distance education

How are Channels Developed?
Developing channels of distribution requires many decisions. 
Channel distribution needs grow and develop as companies grow and 
markets change. Increased channel utilization increases costs which are 
passed on to the consumer. The design of channel development begins by 
studying the buying patterns of the target customers.
Consumer buying patterns affect a channel`s characteristics and 
are classified in the following ways:
➢
Units purchased.
Different customers have different purchasing 
needs. Commercial customers normally purchase larger lot sizes 
than do the household consumer. Channel modifications have to 
be made to meet these different needs.
➢
Turnaround times
. Some industries, such as fast foods, use rapid 
turnaround times as an inherent part of the business, while other 
businesses may have longer turnaround times. Industries having 
customers needing rapid turnaround times require more direct 
channels of distribution than those with slower turnaround times.
➢
Product assortment.
Industries, particularly retail, offering large 
product assortments have a need for deeper channels of distribution 
in order to provide product variety.
➢
Services.
High levels of services, including repair, delivery, 
installation and others, require more intensive channel utilization.
Determining the number of intermediaries will affect the 
marketing of a product. Longer channels have more intermediaries and 
higher costs. On the other hand, intermediary expertise may be essential 
for successfully marketing a particular product. Thus, a manufacturer 
may try and limit the number of intermediaries in order to contain 
costs. The tradeoff in having fewer intermediaries is limited distribution. 

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Notes
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As manufacturers continue to penetrate markets, greater 
distribution is desired involving more intermediaries. While this will 
increase distribution, it will also increase costs while sacrificing some 
degree of marketing control. This may result in having the product 
incorrectly positioned.
Finally, not all intermediaries are the same. The marketer wants 
only those intermediaries who most effectively work with the company to 
distribute the product.
Generally, the companies having the largest array of retail products,