Effectiveness of the distribution channels: the main problem is to decide which of the alternatives would best satisfy the long term objectives of the firm taking in view the factors which would affect the channel distribution. For this purpose, each alternative must be used against economic, control, and adaptive criteria.
Economic criteria: for evaluating the effectiveness of the distribution channels, the economic able to push up the sale of the company? This can be judged by having a market survey of the sales volume of the different channels of distribution and the sale can be estimated under the each alternative. The second second consideration is to estimate the selling and distribution costs of each alternatives. For this purpose ir would be considered whether the costs of a particular alternative are reasonable and within the capacity of the company considering its sales volume and the financial resources. Then the sales and the costs of the different alternatives should be compared having a comparative view of cost - effect on the net proit of the firm. Company's own sale force should also be taken in view and should decide whether he should hore its own sale force or use the sales agency. In comparing the estimated net profit available from such alternatives, cost associated with the different sales levels should also be considered. For this purpose, the total cost should be splitted into the fixed cost and variable costs. Smaller firms having low sales volume or larger firms marketing in the smaller territories would have larger fixed selling and distribution costs if it decides to install its direct channel so in such circumstances, services of middle man should be sought. Contratily, larger firms or smaller firms when their costs for using its own sales force and using other agency reach at break -even point, it would be the better to have its own sale force.
Control criteria: in evaluating the channels the second main consideration is that of the control, how would the marketer be in a position to have a control over a particular channel? This more would be the control; the better would be the channel of the distribution. For this purpose, he is to consider the relationship between the various channels of the distributions, their interests and attitude about the company's product and conflicts among them, legal aspect in appointing a particular channel should also be considered.
Adaptive criteria: the next consideration in the channel decision is to see whether the channel is would be suitable to adapt the changing conditions in the future. Each channel alternative involves some duration of commitment and loss of the flexibility. For example, a channel alternarive involving a long commitment must appear to be greatly superior on the economic or control grounds in order to be considered but it is not valid on the ground of adaptability. The above three criteria must be considered to decide the effectiveness of the various channels of the distributions.