1. Channel management refers to the way in which a business or the supplier of some products uses
different kind of marketing strategies and sales techniques to reach the maximum possible customer
base. A common channel arrangement is: manufacturer --> wholesaler --> distributor --> retailer -->
customer.
An ideal channel includes various components to influence the end users. Direct sales persons contact
and negotiate with decision influencers to pitch for the producers goods. They train the distributors in
the supplier’s product technology and provide required support to the distributors on sales calls at the
user end.
Independent distributors play a value transfer role in the channel management. They purchase goods
from suppliers and sell them to other resellers. Captive distributors are owned by suppliers and mostly
function as a business unit of the firm. Brokers also act as an intermediaries. But they represent a
number of different suppliers or producers at the same time. Brokers are more of deal makers between
individual accounts and the producers rather than delivering the products.
Developing and maintaining a good relation between resellers/consumers and producers is an
important aspect of channel management. During transfer between the various stages of the channel
there is an exchange of something which is deemed valuable by the other. But there is also a struggle to
win the bigger share of control or profit of the service or product in question.
Practically resellers and producers are simultaneous members of more than one channel. Producers
deploys various distributors while distributors work for more than one, and at times rival, producer. A
producer needs to take care about the price to customer as well as the margin to the retailer. Retailer
needs to consider the customer demand as well as ensure good relation with the producer.
There is always a conflict in optimizing the control and resources inherent in distribution. If there are
more intermediaries in the channel, the producer has less control over the product flow through the
channel. Producer also losses control over price charged to consumer. On the other hand a short
channel mandates supplier to perform functions of the channel. This requires supplier to take care of
warehousing, shipping, credit and customer service. This in turn puts pressure on finances of the
suppliers.
Business units differ in terms of available resources, and hence in its capability to control the different
channel functions, and also differ in terms of relative need for direct control on the different aspects of
the channels. a firm with sound finances can afford to have a short channel if it feels a need for it, but
one with constrained financial resources lacks ability to directly control the channel even if if desires to
do so.
Management may decide to have greater control over the channel depending on the nature of the
product or the consumer. Product might be technically complex or there might be huge information
exchange between supplier and consumer or the product might be very important to consumer process.
Management periodically evaluates the options available for shifting a given function to a different point
in the channel. When product becomes mature and the technology has stabilized, many producers
prefer to appoint third party service firms to provide post sale service and repairs which in the starting
days needs greater efforts from the firm.