Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e- Place and Development
of Channel Systems
Text © The McGraw−Hill
Companies, 2002324 Chapter 11
A shared product-market commitment guides cooperative relationships among
channel members as long as the channel system is competitive. However, if cus-
tomers’ Place requirements change, the current channel system may not be effective.
The changes required to serve customer needs may hurt one or more members of
the channel. The most difficult ethical dilemmas in the channels area arise in sit-
uations like this—because not everyone can win.
For example, wholesalers and the independent retailers that they serve in a chan-
nel of distribution may trust a producer channel-captain to develop marketing
strategies that will work for the whole channel. However, the producer may con-
clude that everyone in the channel will ultimately fail if it continues exclusive
distribution. It might decide that consumers, and its own business, are best served
by a change (say, dropping current middlemen and selling directly to big retail
chains). A move of this sort, if implemented immediately, may not give current
middlemen-partners a chance to make adjustments of their own. The more depen-
dent they are on the producer, the more severe the impact is likely to be. It’s not
easy to determine the best or most ethical solution in these situations. However,
marketing managers must think carefully about the implications of strategy changes
in the Place area—because they can have very severe consequences for other chan-
nel members. In channels, as in any business dealing, relationships of trust must be
treated with care.^25Ethical decisions may
be required
Reverse channels
should be planned
Internet
Internet Exercise Avon sells cosmetics and other products through inde-
pendent sales representatives (agents), in kiosks and stores, and also through
a catalog (both online and printed). Review the Avon website (www.avon.com).
Do you think that Avon’s independent sales representatives would view the
website as competing for their customers’ purchases and a source of conflict,
or would they think that it helps them promote the product and identify new
prospects? Explain your thinking.Most firms focus on getting products to their customers. But some marketing man-
agers must also plan for reverse channels—channels used to retrieve products that
customers no longer want. The need for reverse channels may arise in a variety of
different situations. Toy companies, automobile firms, drug companies, and others
sometimes have to recall products because of safety problems. A producer that makes
an error in completing an order may have to take returns from middlemen or other
business customers. If a Viewsonic computer monitor breaks while it’s still under
warranty, someone needs to get it to the authorized repair center. Soft-drinkSome special models of the
Beetle could only be ordered
online direct from V W’s website.
However, the customer was then
directed to a V W dealer who
completed the transaction—an
arrangement that avoids conflict
between V W and its dealers.