Channels

24Apr09

Marketing Channel – agents involved in the process of making a product or service available for use or consumption by consumers or industrial users.

Channel Members: Producer, Distributor/Agent/Broker, Wholesaler/Dealer, Retailer, Customer

Functions of a Marketing Channel

• Transactional Function
• Logistical Function
• Facilitating Function

Channel Structures:

• Traditional Channel or Online Channel
• Direct or Indirect Channel

Channel Conflicts:

• Vertical Channel Conflict- between members at different levels

• • Disintermediation: when one channel member by-passes another member and buys or sells direct
  • Profit Sharing: distribution of profit margins among channel members
  • Inadequate selling effort by retailers:

• Horizontal Channel Conflict – between members at the same level

• • Increased distribution coverage
  • The same brand carried by different types of retailers
  • “Free Riding” Problem

Factors Influencing Channel Choice:

• Target Market Coverage

• • Intensive
  • Extensive
  • Selective

• Buyer Requirements

• Information, Convenience, Variety, Service.

Profitability

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