The more involved a company is with the distribution, the more control it exerts. A company’s own sales force affords the most control but often at a cost that is not practical. Each type of channel arrangements provides a different level of control, as channels grow longer, the ability to control price, volume promotion ad type of outlets diminishes. If a company cannot sell directly to the end user or final retailer, an important selection criterion for middlemen should be the amount of control the marketer can maintain.
Another major goal s full market coverage to gain the optimum volume of sales obtainable in each market secure a reasonable market share, and attain satisfactory market penetration. Coverage may be assessed by geographic segments, market segments or both. Adequate market coverage may require changes in distribution systems from country to country or time to time. Coverage is difficult to extend both in highly developed areas in sparse markets – the former because of heavy competition and the latter because of inadequate channels.
Many companies do not attempt full market coverage but seek significant penetration in major population centers. In some countries two or three cities constitute the majority of the national buying power. For instance, 60 per cent of the Japanese population lives in the Tokyo Nagoya Osaka market area, which essentially functions as one massive city.
At the other extreme are many developing countries with a paucity of specialized middlemen except in major urban areas. Those that do exist are often small, with traditionally high margins. Those that do exist are often small, with traditionally high margins. In China, for example, the often cited billion person market is, in reality confined to fewer 25 to 30 percent of the population of the most affluent cities. Even as personal income increases in China distribution inadequacies limit marketers in reaching all those who have adequate incomes. In both the difficulty of developing an efficient control from existing middlemen plus the high cost of distribution may nullify efficiencies achieved in other parts of the marketing mix.
To achieve coverage a company may have to use many different channels – its own sales force in one country, manufacturers agents in another and merchant wholesalers is still another.
The channel of distribution system selected must fit the character of the company and the markets in which is doing business. Some obvious product requirements often the first considered relate to perish ability or bulk of the product complexity of sale, sales services required and value of the product.
Channel commanders must be aware that channel patterns change, they cannot assume that once a channel has been developed to fit the character of both company and market no more need be done. Great Britain, for example, has epitomized distribution through specialty type middlemen distributors wholesalers and retailers in fact all middlemen have traditionally worked within narrow product specialty areas. In recent years, however, there has been a trend toward broader lines, conglomerate merchandising and mass marketing. The firm ha neglects the growth pf self service scrambled merchandising or discounting may find it has lost large segments of its market because its channels no longer reflect the character of the market.
Channels of distribution often pose longevity problems. Most agent middlemen firms tend to be small institutions. When one individual retires or moves out of a line of business, the company may find it has lost its distribution in that area. Wholesalers and especially retailers are not noted for their continuity in business either. Most middlemen have little loyalty to their vendors. They handle brands in good times when the line is making money, but quickly reject such products within season or a year if they fail to produce during the period. Distributors and dealers are probably the most loyal middlemen, but even with them, manufacturers must attempt to build brand loyalty downstream in a channel test middlemen shift allegiance to other companies or other inducements.