Power is our willingness to use force in a relationship. It is often the means by which we are able to control or influence the behavior of another party. In the channel mechanism, power refers to the capacity of a particular channel member to control or influence the behavior of another channel member. For instance, a large retailer may want the manufacturer to modify the design of the product or perhaps be required to carry less inventory. Both parties may attempt to exert their power in an attempt to influence the other's behavior. The ability of either of the parties to achieve this outcome will depend upon the amount of power that each can bring to bear.
- Three general alternatives exist in organizing the channel: conventional, vertical, and horizontal.
- The steps in channel design include the following:
- Analyze the consumer.
- Establish channel objectives.
- Specify the channel tasks.
- Select the appropriate channel from available alternatives.
- Evaluate the results.
- Channels may exhibit several human traits:
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Marketing channels connect producers and consumers by moving finished goods that are available for consumption. Channel management is a process involving careful planning and monitoring. As with other marketing functions, marketing channels have objectives that guide their activities.
To successfully manage distribution channels, marketers must analyze end consumers, establish channel objectives, specify channel tasks, select the appropriate channel, and evaluate results of the process. If these steps are executed successfully, marketers can help their organizations save costs.
Several professional and trade associations exist for channel managers and those involved in the process. The American Society of Transportation and Logistics (www.astl.org) is a professional organization founded in 1946 by a group of industry leaders to ensure a high level of professionalism and promote continuing education in the field of transportation and logistics.
The National Association of Wholesalers-Distributors (www.naw.org) comprises over 100 national line-of-trade associations, representing virtually all products that move to market via wholesaler distributors.
The National Retail Federation (www.nrf.com) conducts programs and services in research, education, training, information technology, and government affairs to protect and advance the interests of the retail industry. NRF also includes in its membership key suppliers of goods and services to the retail industry.
Marketing channels can make or break Internet companies. Many Internet companies attempt to differentiate themselves by providing fast delivery of customer orders anywhere in the world. To achieve this, these companies must successfully manage their marketing channels. The Interactive Journal's Tech Center is an excellent source for all issues related to technology.
Keep apprised of emerging technologies, developments in specific companies, and industry trends by reading articles in Tech Center and Marketplace.
Use the Interactive Journal to search for articles about one organization that successfully manages channels and one organization that does not. Compare the strategies of both companies and discuss what works and what does not work for each organization. Support your conclusions with concepts form the chapter.
- Why do organizations need to effectively manage their channels of distribution? What happens when they do not?
- How does ineffective channel management affect consumers? An organization's revenue stream?
- What role does technology play in channel management? What types of technology can organizations use to improve channel management?