CHANNEL DISTRIBUTION

Evaluation of Delivery Channels for Financial Services Organisation (FSO)

Evaluation of Delivery Channels for Financial Services Organisation (FSO)

Introduction

The distribution channels for goods and services have changed immensely in the past few decades. This is particularly true for economies of developing countries. The choice of channel is most often influenced by the buyers' preferences. This preference is affected by the modernized distribution channels in the form of internet, telephony, and logistics. These have practically made the traditional distribution channels obsolete. Hence, an effective choice of distribution channel became a need (Park & Reber, 2008, p. 115). Financial services organizations also followed the bandwagon and expanded their operations beyond the age old distribution channels. In this context, it is imperative to state that any distribution channel whether old or new has certain requirements which are misunderstood in majority of cases.

The paper discusses the factors that must be considered by financial services organizations while evaluating the different distribution channels to be offered to their valued customers.

Channel selection by Financial Services Organizations

The decision of the right distribution channel is not an easy one for a financial services organization. They have to look into multiple things such as which channel must be used, what is the cost that the organization will have to endure and how the usage of a certain delivery channel will be aligned with the corporation's strategy and overall strategic mission and vision. The financial services organization offer products and services that are essentially the same. For instance, the credit product of a company will be same as the credit product of another company in terms of its covenants, majority terms and conditions as well as the interest rate being offered. However, still there are consumers who would a certain distribution channel and not the other. Three of the major factors that play a key role in the selection of a certain distribution channel are consumer, product and channel characteristics.

Consumer

One of the most important elements that determine which channel would be selected by a particular user is consumer confidence. The higher the level of confidence the greater will be the probability that consumers will respond positively towards the channel. Motivation also determines which channel would be used by a certain set of consumers. For instance, when it comes to branch network, people feel a sense of social motivation to use it. Another reason for using a certain channel may be ...