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Problem

Describe specific product, market, and competitive conditions that lend themselves to: (a) a direct channel of distribution and (b) an indirect channel of distribution.

Step-by-step solution

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Step 1/2

Direct distribution channel is a marketing strategy which does not use intermediaries and managed by organization itself.

Direct channel of distribution is appropriate when-

• The number of customers is large and they are very specific about their requirements from the product so the products are customized for them.

• Organization knows their targeted customers very well.

• The organization wants to respond quickly according to market conditions.

• The price of the product or service can be negotiated with top level management.

• Organization wants to maintain direct relationship with their customers.

Step 2/2

Indirect distribution channel use at least one or more type of intermediaries so we can say the indirect distribution channel depends on intermediates to perform distribution function.

Indirect channel of distribution is appropriate when-

• Customers are not well defined and market is widely dispersed.

• Organization wants to cover more geographical area by reaching to the end users.

• There are number of products bought by a customer.

• Organization wants to reduce some operating cost like sales, inventory, promotions, etc.