What Work is Performed by Marketing Channels? 237
vices from those who need or want them. Members of the marketing channel perform
a number of key functions:
➤ They gather information about potential and current customers, competitors, and
other actors and forces in the marketing environment.
➤ They develop and disseminate persuasive communications to stimulate purchasing.
➤ They reach agreement on price and other terms so that transfer of ownership or
possession can be effected.
➤ They place orders with manufacturers.
➤ They acquire the funds to finance inventories at different levels in the marketing
channel.
➤ They assume risks connected with carrying out channel work.
➤ They provide for the successive storage and movement of physical products.
➤ They provide for buyers’ payment of their bills through banks and other financial
institutions.
➤ They oversee actual transfer of ownership from one organization or person to
another.
Some functions (physical, title, promotion) constitute a forward flowof activity
from the company to the customer; other functions (ordering and payment) consti-
tute a backward flowfrom customers to the company. Still others (information, negoti-
ation, finance, and risk taking) occur in both directions. Five flows are illustrated in
Figure 5-2 for the marketing of forklift trucks. If these flows were superimposed in one
diagram, the tremendous complexity of even simple marketing channels would be
apparent.
The question is not whetherthese channel functions need to be performed—they
must be—but rather whois to perform them. All channel functions have three things
in common: They use up scarce resources; they can often be performed better
through specialization; and they can be shifted among channel members. If a manu-
Figure 5-1 How a Distributor Effects Economy of Effort