Production Costs

Production Costs

Production Costs

The cost of the production of the product must also have a bearing on the choice of distribution method. The more sophisticated product manufacture has become, the greater has been the manufacturer's investment in expensive plant and equipment. This need for high capitalization has resulted in limiting the number of manufacturers making any one class of product. Heavy investment in production compels each manufacturer to ensure its fullest utilization. This means controlled distribution.

In certain product fields even a policy of direct-to-retailer is insufficient to ensure maximum control and we find the producer by-passing 'the trade' altogether and going directly to the consumer by means of mail order selling. Examples of this approach may be seen in online music and book chatrooms, health foods, home extensions, garages and greenhouses. An extension of the direct to-consumer method is the appointment of local agents working largely on a commission-only basis, to sell such items as corsetry and cosmetics and to call house-to-house for the sales of brushes and other hardware lines.


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