Why are access to distribution channels considered a barrier to entry?

Access to distribution channels is considered a barrier to entry primarily because competitors can establish strong customer loyalty, particularly in environments like supermarkets. When established businesses have secured favorable distribution agreements, they often create a loyal customer base. This loyalty can be difficult for new entrants to overcome, as consumers may prefer familiar brands that they can easily find in stores. Supermarkets often favor long-term partnerships with existing suppliers, making it challenging for newcomers to gain shelf space or visibility among consumers.

In contrast, the other options relate to various operational aspects but do not directly connect to the concept of barriers to entry in the context of distribution channels. For instance, limiting advertising opportunities can affect brand recognition but does not solely pertain to the challenge of distributing products. Similarly, increased production lead times or reduced brand visibility are issues that might impact an existing company’s operations but do not create a direct barrier related to the loyalty and established relationships among competitors within essential distribution networks.