Using Marketing Channels to Create Value for Customers
Completion requirements
Read this chapter, which explains that a direct marketing channel consists of just two parties: the producer and the consumer. By contrast, a channel that includes one or more intermediaries (wholesalers, distributors, brokers, or agents) is an indirect channel. Firms often utilize multiple channels to reach more customers and increase their effectiveness. Some companies find ways to increase their sales by forming strategic channel alliances. Other companies look for ways to cut out the middlemen from the channel, known as disintermediation. Direct foreign investment, joint ventures, exporting, franchising, and licensing are some of the channels by which firms attempt to enter foreign markets.
Channel Dynamics
Review Questions
- What gives some organizations more channel power than others?
- Why do channel conflicts occur?
- Which organization(s) has the most power to resolve channel conflicts?
- How can setting up vertical and horizontal marketing systems prevent channel conflicts?