to do this, companies generally prefer to build a vertical distribution channel or depend only on
retailers or agents to distribute the product.
Another method of selecting a channel is comparison of the Return on Investment (ROI) of each
channel. The ROI of a channel is expressed as R
i
=(S
i
- C
i
)/C
i
where
R
i
= ROI of channel i
S
i
= Estimated sales value generated if channel i is opted
C
i
= Estimated cost incurred by channel i.
Channels having higher ROI are opted for distributing a company’s goods.
■External environment: External environmental factors such as state of economy, technological
development, legal provisions and fi scal structure prevailing in a country also have an impact ...
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