Most manufacturers of products use marketing intermediaries to sell their products to the consumers. The marketing intermediaries make up a marketing channel (distribution channel or a trade channel). The marketing channel overcomes the time, place, and possession gaps that separate gods and services from those who need or want them.
Marketing Intermediaries and Their Functions
Most manufacturers of products use marketing intermediaries to sell their products to the consumers. The marketing intermediaries make up a marketing channel (distribution channel or a trade channel).
Stern and El-Ansary define: “Marketing channels are sets of interdependent organizations involved in the process of making a product or service available for use or consumption.”
The marketing channel overcomes the time, place, and possession gaps that separate gods and services from those who need or want them. Some of the functions that channel members perform are:
A zero level channel is direct marketing between producer and consumer.
In one level channel a retailer is between producer and consumer.
Two level channels have wholesaler and retailer.
Still longer channels also exist in some industries.
Channel design decisions involve analyzing customers’ desired service levels, channel objectives of the firm.
Customers' desired service levels have researched in the areas of lot size, waiting time, spatial convenience, product variety and service backup.
The channel designer must know the service outputs desired by the target customers.
Establishing the Channel Objectives and Constraints
The channel objectives have to be specified in terms of targeted service output levels for each target segment served by the channel. According to Bucklin, channel participants should design and manage their activities so as to minimize total channel costs with respect to desired levels of service outputs.
The major design decisions include the type of intermediary, number, terms and responsibilities of intermediaries.
An economic criterion is to be applied in final design of the channel.
The channel management decisions include selection of channel members, motivating the channel members to promote and achieve sales, and evaluation and modification of arrangements.
Modifications of distribution system are required when the current system is not working as planned and not delivering the desired results.
Philip Kotler, Marketing Management (Main text for revision and article)
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Updated 6 June 2014, 3 Dec 2011