CHANNEL STRUCTURE AND MEMBERSHIP

1
CHANNEL STRUCTURE AND MEMBERSHIP

• Whether to use intermediaries
• Some potential channel structures
• Types of intermediaries to be used
• Parallel (dual) distribution decisions
• Evaluating channel performance

2
When To Use Intermediaries

• High demand for assortment and variety
• Low volume purchases by individuals
• Others can more efficiently run logistics

3
Potential Channel Structures (U.S.)
Producer
Producer
Producer
Producer
Agents/ Brokers
Wholesalers
Wholesalers
Retailers
Retailers
Retailers
Consumer
Consumer
Consumer
Consumer
4
Types of Intermediaries That Should be
Used--Criteria

• Cost effective relative to service provided
• Compatible with product image
• Mutual benefit
• compensation
• piggy-backing or reciprocal piggy-backing

5
Parallel Distribution Structures
MANUFAC- TURER
DISTRI- BUTOR
RETAILER
MAJOR CHAIN (e.g., Wal-Mart)
DIRECT MARKETING
FACTORY OUTLET
6
Evaluating Channels

• Service output fulfillment
• Assignment of channel flows to lowest cost
  performer (subject to quality standards)

• Timeliness and quality of members
• Compliance with equity principle