Executive Summary CH12
Most producers do not sell their goods directly to final users.
Between producers and final users stands one or more marketing channels, marketing intermediaries performing a variety of functions.
Companies use intermediaries when they lack the financial resources for direct marketing, when direct marketing is not feasible, and when they can earn more by doing so. The most important functions performed by intermediaries are
- information,
- promotion,
- negotiation,
- ordering,
- financing,
- risk taking,
- physical possession,
- payment, and
- title.
Manufacturers can sell direct or use one-, two-, or three-level channels, depending on customer needs, channel objectives, and the major alternatives, including the types and numbers of intermediaries involved in the channel.
Effective channel management calls for selecting intermediaries and training and motivating them to build a profitable partnership.
Three key channel trends are the growth of vertical marketing systems, horizontal marketing systems, and multichannel marketing systems.
More companies have adopted “brick-and-click” channel systems for e-commerce; m-commerce (selling via smart phones and tablets) is also gaining in importance.
All marketing channels have the potential for conflict and competition resulting from goal incompatibility, poorly defined roles and rights, perceptual differences, and interdependent relationships.
Among the legal and ethical issues to be considered when planning channel strategies are exclusive dealing or territories, tying agreements, and dealers’ rights.
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