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1. What is a Distribution Channel?
• A set of interdependent organizations
(intermediaries) involved in the process
of making a product or service available
for use or consumption by the consumer
or business user.
• Channel decisions are among the most
important decisions that management
faces and will directly affect every other
marketing decision.
2. Importance of Marketing Intermediaries
• Greater efficiency in making goods
available to target markets.
• Offer the firm more than it can achieve
on it’s own :
–Contacts
–Experience
–Specialization
–Scale of operation
• Match supply and demand.
5. • Merchant Wholesalers
– Some types of merchant wholesalers engage in a full range of
wholesaling functions while others specialize in only limited
services.
– Both buy goods from various suppliers and then resell those
goods to their commercial customers, either industrial buyers
or other resellers such as a retailer.
• Agent Middlemen
They do not take title to, or physical possession of, the goods
they deal in.
– Manufacturer’s agents or manufacturer’s reps
– Sales agents
– Brokers
– E-Hubs
Institutions Found in Marketing Channels
6. • Retailers
– Sell goods and services directly to final consumers for their
personal, nonbusiness use.
– One classification scheme groups stores according to their
method of operation:
» Low margin/high turnover
» High margin/low turnover
• Non-store Retailing
– Includes direct selling, mail-order catalogs, TV shopping,
vending machines, and Web sites.
– Auction sites facilitate retail start-ups.
Institutions Found in Marketing Channels
13. Channel Management Decision
(Motivation)
• Sources of channel power
–Economic power
–Coercive power
–Expert power
–Referent power
–Legitimate power
• The power of any firm within a distribution
channel is inversely proportional to how
dependent the other channel members are on
that firm.
14. Channel Behavior & Conflict
• The channel will be most effective when:
–each member is assigned tasks it can do best.
–all members cooperate to attain overall channel
goals and satisfy the target market.
• When this doesn’t happen, conflict occurs:
–Horizontal Conflict occurs among firms at the
same level of the channel.
–Vertical Conflict occurs between different levels
of the same channel.
• For the channel to perform well, conflict
must be managed.
