D
ecisions about marketing channels, which help producers deliver goods and ser-
vices to their target markets, are among the most critical facing management—
because the channels that are chosen intimately affect all of the other marketing deci-
sions. For example, the company’s pricing depends on whether it uses a direct Web
presence, discount merchants, or high-quality boutiques. Also, the firm’s sales force and
advertising decisions depend on how much training and motivation its dealers need.
Another reason why these decisions are so critical is that they involve relatively
long-term commitments to other firms. When an automaker signs up independent
dealers to sell its vehicles, the automaker cannot simply buy them out the next day and
replace them with company-owned outlets. As Corey observed, “A distribution system
... is a key external resource. Normally it takes years to build, and it is not easily
changed. It ranks in importance with key internal resources such as manufacturing,
research, engineering, and field sales personnel and facilities. It represents a signifi-
cant corporate commitment to large numbers of independent companies whose busi-
ness is distribution—and to the particular markets they serve. It represents, as well, a
commitment to a set of policies and practices that constitute the basic fabric on which
is woven an extensive set of long-term relationships.”^1
Technology is, of course, having a profound effect on channel decisions and man-
agement. In an era when buyers and sellers alike seek speedier sales transactions,
marketing-channel technologies (including automated inventory and storage systems)
235
Selecting and
Managing
Marketing
Channels
We will address the following questions:
■What work is performed by marketing channels?
■What decisions do companies face in designing, managing, evaluating, and modifying
their channels?
■What trends are taking place in channel dynamics?
■How can channel conflict be managed?