The buying pattern of customers determine the choice of the channel of distribution. To enumerate further, the following factors are considered.
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Number of potential Customers:- A relatively small number of customers may not require the use of middlemen, thus manufacturers sell directly to customers, if the number of customers are more than manufacturers make use of the middlemen because of the difficulties of covering large number of customers.
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Order Size: Large orders requires direct sale whil small orders are treated by the regular channel of distribution.
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Perishability: The most appropriate channel of distribution for perishable goods is a short channel otherwise loss of product/fund would be experienced.
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Geographical Concentration of the Market: The seller finds it easier to deal with potential customers where they are concentrated in a particular geographical area where customers are scattered over a widegeographical area, branch offices are used in reaching them.
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Technical nature of the product: Product which are technical in nature particularly industrial products which require presale and post sale services are distributed directly to industrial users.
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Desire to control Channel of distribution: Some firm adopt this method of distribution for reasons as engaging in more aggressive promotion of their products, discouraging possible adulteration of there products; and their retail price(s).
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Financial Resources of the Firm: The financial strength of a firm determines it's choice of the number of middlemen it uses. An economical buoyant firm can establish it's own credit scheme; warehouse for it's products, a sales force of it's own; all these are facilities that a poor firm might not be able to afford.
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Unit value of a product: The lower the unit value of a product the longer the channel of distribution.