Channel Management A Channel is the medium through which a product reaches to a costumer.

A typical channel is as follows: Manufacturer Consumer A Channel functions include Demand Generation or Selling, Carrying of Inventory, Physical Distribution, After-Sale Service, Extending credit to costumers, Product modification and maintenance. The Components of a direct sales force include being in touch with various departments of the supplier, distributer, and training distributer personnel with necessary skills, checking intermediarys inventory and implementing promotional schemes Distribut Ownership of Products Cost Product Lines/ suppliers Economies of Scope Economies of Scale Specific attention to product Inventory Holding ors Yes Fixed Many Large Large Low Large Captive Distributors Yes Fixed Single Less Large Very High Large Agent s No Variab le Few Less Less High Less Broker s No Variab le Few Less Less High None Wholesaler Distributor Retailer

Channel Relations: The supplier and the channel share a common goal of increasing the sales of the product from that channel but on a broader perspective they have different reason for why they do. 1) Varied Goals tug of war: There is a conflict between the goals and operating constraints of the reseller and the suppliers, regarding what should be the marketing strategies and their implementation. Thus suppliers should develop their capabilities at two levels As sources of products and revenues and as Locus of brand preference with end users The resellers also assume two roles as selling agents for suppliers and as sources of supply for customers. 2) Multiple Agreements entangling alliances: Most distributors and resellers sell more than one product, thus there is a clash between the goals of distributor and seller.

Control vs Resources: there is always a trade-off between the suppliers ability to control important channel functions and the resources required to exercise that control. Typically, more the control, more will be the resources required Hig h Lo w Low Resources are limiting factor Control as subordinate factor High Control as determining factor Financial Efficiency as determining factor