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Manufacturers, wholesalers, and retailers, as well as other channel members, exist in channel arrangements to perform one or more of the following generic functions: carrying of inventory; demand generation, or selling; physical distribution; after-sale service; and extending credit to customers. In getting its goods to consumers or end users, a manufacturer must either assume all these functions or shift some of them or all to channel intermediaries.
The above discussion underscores three important principles in the structure of marketing channels:
1. One can eliminate or substitute institutions in the channel arrangement.
2. However, the functions these institutions perform cannot be eliminated.
3. When institutions are eliminated, their functions are shifted either forward or backward in the channel and are therefore assumed by other members.
It is a truism that you can eliminate an intermediary, but you cannot eliminate its functions.
To the extent that the same function is performed at more than one level of the marketing channel, the work load for the function is shared by members at these levels. For example, manufacturers, wholesalers, and retailers may all carry inventory. This duplication may increase distribution cost. However, the increase in cost is justifiable to the extent that it may be necessary to provide goods to customers at the right quantity, quality, time, and place.
A flow in the marketing channel is identical to a function. However, the term flow is somewhat more descriptive of movement, and, therefore, we tend to prefer. Physical possession, ownership, and promotion are typically forward flows from producer to consumer. Each of these flows moves down the distribution channel a manufacturer promotes a product to a wholesaler, who in turn promotes it to retailer) and so on. The negotiation, financing, and risking flows move in both directions, whereas ordering and payment are backward flows.
In every marketing channel, the members that do business together have some kind of working relationships. On the extreme ends on the continuum of these relationships, there are purely transactional relationships on one side and purely collaborative ones on the other. Transactional relationships occur when the customer and supplier focus on the timely exchange of basic products for highly competitive prices. Collaborative relationships, or partnerships, occur through partnering, which is a process where a customer and supplier form strong and extensive social, economic, service, and technical ties over time. The intent in a strategic partnership or alliance is to lower total costs and/or increase value for the channel, thereby achieving mutual benefit. A strategic alliance can also denote horizontal partnerships that develop between two organizations at the same marketing level. Partnerships capitalize on the notion that marketing channels are vertical value-adding chains that create competitive advantage.
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A trend that is an outgrowth of partnerships is the seamless channel. This concept is related to the concept of the seamless organization, which has all departments working together to serve the customer, thereby blurring the organizational lines that separate departments within the organization. The seamless channel blends the borders of channel members by having multiple levels in each organization work together with their counterparts in other channel organizations to deliver quality service to the customer. Partnerships contribute to the seamless channel by giving channel members a sense of being on the same team. The adversarial role that is so prevalent is replaced with one built on trust and cooperation.
2. :
1. retailer;
2. wholesaler;
3. end user;
4. intermediary;
5. ownerships;
6. partnerships;
7. counterpart;
8. justifiable;
9. the adversarial role;
10.trust and cooperation.
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1. expend,
2. use,
3. invent,
4. channel,
5. market,
6. retail,
7. justify,
8. own,
9. distribute,
10. relation.
5. : , , , , . In every marketing channel, the members that do business together have some kind of working relationships.
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1. In getting its goods to consumers or end users, a manufacturer must either
assume all these functions or shift some of them or all to channel
Intermediaries.
2. When institutions are eliminated, their functions are shifted either forward or backward in the channel and are therefore assumed by other members.
3. To the extent that the same function is performed at more than one level of the marketing channel, the work load for the function is shared by members at these levels.
4. However, the increase in cost is justifiable to the extent that it may be
necessary to provide goods to customers at the right quantity, quality, time,
and place.
5. The intent in a strategic partnership or alliance is to lower total costs and/or increase value for the channel, thereby achieving mutual benefit.
7. :
1. What is the aim of manufacturers, wholesalers, and retailers?
2. What are three important principles in the structure of marketing channels?
3. What is referred to as truism?
4. What is meant by flow?
5. How does the author describe the relations within the units on marketing channels?
6. What is a seamless channel?
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7. What role is devoted to trust and cooperation?
8. What must manufacturer do to get goods to consumers or end users?
9. How do partnerships contribute to the seamless channel?
10. What concept is related to the concept of the seamless organization?
