Marketing Management, Millenium Edition - epiheirimatikotita.gr

250 CHAPTER 13 SELECTING AND MANAGING MARKETING CHANNELSThe next chapter examines the marketing strategies and challenges of retailersand wholesalers as channel members.EXECUTIVE SUMMARYMost producers do not sell their goods directly to final users. Between producers andfinal users stands one or more marketing channels, a set of marketing intermediariesperforming a variety of functions. Companies use intermediaries when they lack thefinancial resources to carry out direct marketing, when direct marketing is not feasible,and when they can earn more by going through intermediaries. The use of intermediarieslargely boils down to their superior efficiency in making goods widely availableand accessible to target markets. The most important functions performed byintermediaries are gathering information, handling promotion, handling negotiation,placing orders, arranging financing, taking risks, and facilitating physical possession,payment, and title.Manufacturers have many alternatives for reaching a market. They can sell directthrough a zero-level channel or use one-, two-, or three-level channels. Deciding whichtype(s) of channel to use calls for analyzing customer needs, establishing channelobjectives, and identifying and evaluating the major alternatives. The company mustalso determine whether to distribute its product exclusively, selectively, or intensively,and it must clearly spell out the terms and responsibilities of each channel member.Effective channel management calls for selecting intermediaries, then trainingand motivating them. The goal is to build a long-term partnership that will be profitablefor all channel members. Individual members must be evaluated periodicallyagainst preestablished standards, and overall channel arrangements may need to bemodified over time. Three of the most important trends in channel dynamics are thegrowth of vertical marketing systems, horizontal marketing systems, and multichannelmarketing systems.All marketing channels have the potential for conflict and competition resultingfrom such sources as goal incompatibility, poorly defined roles and rights, perceptualdifferences, and interdependent relationships. Companies can manage conflict bystriving for superordinate goals, exchanging people among two or more channel levels,coopting the support of leaders in different parts of the channel, and throughdiplomacy, mediation, or arbitration to resolve chronic or acute conflict.Channel arrangements are up to the company, but there are certain legal andethical issues to be considered with regard to practices such as exclusive dealing or territories,tying agreements, and dealers’ rights.NOTES1. E. Raymond Corey, Industrial Marketing: Cases and Concepts, 4th ed. (Upper Saddle River,NJ: Prentice-Hall, 1991), ch. 5.2. Louis W. Stern and Adel I. El-Ansary, Marketing Channels, 5th ed. (Upper Saddle River, NJ:Prentice-Hall, 1996).3. Stern and El-Ansary, Marketing Channels, pp. 5–6.4. For additional information on backward channels, see Marianne Jahre, “Household WasteCollection as a Reverse Channel—A Theoretical Perspective,” International Journal ofPhysical Distribution and Logistics 25, no. 2 (1995): 39–55; and Terrance L. Pohlen and M.Theodore Farris II, “Reverse Logistics in Plastics Recycling,” International Journal of PhysicalDistribution and Logistics 22, no. 7 (1992): 35–37.