Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic

Marketing: A

Global−Managerial

Approach, 14/e

11. Place and Development
    of Channel Systems

Text © The McGraw−Hill

Companies, 2002

308 Chapter 11

A firm may have to go direct if suitable middlemen are not available or will not

cooperate. For example, Apple is again opening its own stores in hopes of getting

more in-store promotional emphasis on what’s different about its iMac computers.^3

Middlemen who have the best contacts with the target market may be hesitant

to add unproven vendors or new products, especially really new products that don’t

fit well with their current business. Many new products die because the producer

can’t find willing middlemen and doesn’t have the financial resources to handle

direct distribution.

In the United States, the Census Bureau publishes detailed data concerning

wholesalers and retailers, including breakdowns by kind of business, product line,

and geographic territory. Similar information is available for Canada and many other

countries, including most of those in the European Union. Most of this data is avail-

able online. It can be very valuable in strategy planning—especially to learn

whether potential channel members are serving a target market. You can also learn

what sales volume current middlemen are achieving.

Many business products are sold direct-to-customer. Rolm, for example, sells its

computerized voice mail systems direct. Alcan sells aluminum to General Motors

direct. And Honda sells its motors direct to lawn mower producers. This is under-

standable since in business markets there are fewer transactions and orders are larger.

In addition, customers may be concentrated in a small geographic area, making dis-

tribution easier. Further, once relationships are established e-commerce systems can

provide an efficient way to handle orders, inventory replenishment, and routine

information needs (such as delivery schedules).

Service firms often use direct channels. If the service must be produced in the

presence of customers, there may be little need for middlemen. An accounting firm

like Arthur Andersen, for example, must deal directly with its customers. However,

many firms that produce physical goods turn to middlemen specialists to help

provide the services customers expect as part of the product. Maytag may hope that

its authorized dealers don’t get many repair calls, but the service is available when

customers need it. Here the middleman produces the service.^4

Many companies that produce consumer products have websites where a con-

sumer can place a direct order. But for most consumer products this is still a small

part of total sales. Most consumer products are sold through middlemen.

When Snapple bought SoBe’s
main wholesaler in New Jersey,
other goods wholesalers were
not available and SoBe was left
with limited distribution. So
marketers for SoBe sold directly
to retailers. Getting retailer
cooperation and good shelf
space was easier when SoBe
provided its own coolers.

Suitable middlemen are
not available

Common with business
customers and
services

Some consumer
products are sold
direct