How does product price affect the distribution channel?

The relationship between product price and the distribution channel is important to understand in business practices. When the price of a product is higher, companies often choose to extend the length of their distribution channels. A longer distribution channel includes more intermediaries, such as wholesalers or retailers, which can help ensure that the product reaches the consumer effectively and efficiently.

Higher-priced products generally require a more strategic approach to distribution to justify their cost and to reach target markets effectively. This may involve using additional intermediaries who can add value through marketing, customer service, or specialized knowledge, which in turn can help secure higher sales for more expensive items.

Also, higher-priced products may require more effort in market penetration, hence necessitating a wider network of distribution options to reach various segments of consumers. Therefore, in this context, the length of the distribution channel tends to increase as a strategic response to the product's price point.