Final answer:
In the context of factors affecting channels of distribution, functions performed by middlemen is a key element in determining distribution decisions. These intermediaries facilitate various functions like warehousing and transportation, which affect how products reach consumers. The competitive market structure often leads to consumer benefits and firms must consider these aspects when choosing distribution channels.
Step-by-step explanation:
Factors Affecting Channel Choice
When considering factors that affect the choice of distribution channels, one of the key elements is functions performed by middlemen. Middlemen, or intermediaries, play a vital role in the distribution of goods as they perform various functions that facilitate the movement of products from producers to the end consumers. These functions include but are not limited to warehousing, transportation, financing, risk-taking, and providing market information. Their expertise in handling certain aspects of distribution could influence a company’s decision in the selection of appropriate channels. The choice of distribution channels significantly affects market structures and competition, which can influence the prices and availability of goods to consumers.
Furthermore, understanding market structures is critical as they impact consumer choices. Market structure refers to the level of competition within an industry, which affects how firms operate, set prices, and make production decisions. A competitive market structure often results in benefits for consumers, such as lower prices and higher quality products due to the forces of supply and demand.
Physical aspects of a product, such as an unbreakable bottle or non-shrink features, and a firm’s strategic location can also create differentiations and competitive advantage among producers. Therefore, these factors, together with the functions performed by intermediaries, must be considered by businesses when making distribution decisions.