256 CHAPTER 10 CHANNELCONCEPTS:DISTRIBUTINGTHEPRODUCT
persuasiveconununicationintheformofadvertising,personalselling,salespromotion,and
publicrelations.
FunctionsoftheChannel
Theprimarypurposeofanychannelofdistributionistobridgethegapbetweenthepro-
ducerofa productandtheuserofit,whetherthepartiesarelocatedinthesamecommu-
nityorindifferentcountriesthousandsofmilesapart. Thechanneliscomposedofdiffenont
institutionsthatfacilitatethetransactionandthephysicalexchange.Institutionsinchan-
nelsfallintothreecategories:(1)theproduceroftheproduct-acraftsman,manufacturer,
farmer, orotherextractiveindustryproducer;(2)theuseroftheproduct- anindividual,
household,business buyer,institution,orgovernment;and(3)certainmiddlemena.thewhole-
saleand/orretaillevel.Notallcrannelmembersperformthesamefunction
Heskett^2 suggeststhata channelperformsthreeimportantfunctions:
- Transactionaljunctions-buying,selling,am:riskassumptiQj'~.
- Logisticaljunctions-assembly,storage,sorting,andtransportation.
- Facilitating junctions-post-purchaseserviceandmaintenance,financir:g,infor-
mationdissemination,andchannelcoordinationorleadership.
Thesefunctionsarenecessaryfortheeffectiveflowofproductandtitktothecustomerand
paymentbacktotheproducer.Certaincharacteristicsareimpliedin everychannel.First,although
youcaneliminateorsubstitutechannelinstitutions,thefunctionsthattheseinstitutionsper-
formcannot~eeliminated. Typically,if a wholesalerora retailerisremovedfromthechan-
nel,thefunctiontheyperformwillbeeithershiftedforwardtoa retailerortheconsumer,or
shiftedbackwardtoa wholesalerorthemanufacturer. Forexample, a producerofcustomhunt-
ingknivesmightdecidetosellthroughdirectmailinsteadofretai;outlets.Theproducerabsorbs
thesOlting,storage,andriskfunctions;thepostofficeabsorbsthetransportationfunction;and
theconsumerassumesmoreliskin notbeingabletotouchortrytheproductbeforepurchase.
Second,allchannelinstitutionalmembersarepartofmanychannel'Lran~actionsat
anygivenpointintime. As a result,thecomplexitymaybequiteoverwhelming.Con::ider
forthemomenthowmanydifferentproductsyoupu:'chaseina sing:eyear,andthevast
numberofchannelmechanismsyouJse.
Third,thefactthatyouareabletocompleteallthesetransactionstoyoursatisfac-
tion,aswellastothesatisfactionoftheotherchannelmembers,is duetotheroutinization
benefitsprovidedthroughthechannel.Routinizationmeansthattherightproductsaremost
alwaysfoundinplaces(cataloguesorstores)wheretheconsumerexpectstofindthem,com-
parisonsarepossible,pricesaremarked,andmetnodsofpay::nentareavailable.Routinization
aidstheproduceraswellastheconsumer, inthattheproducerknowswhattomake,wnen
to make;t,and howwanyunitstomake.
Fourth,thereareinstanceswhenthebestchannelarrangementis direct,fromthepro-
ducertotheultimateuser. Thisisparticularlytruewhenavailablemiddlemenareincom-
petent,unavailable. ortheproducerfeelshecanperformthetasksbetter.Similarly,it may
beimport:.:ntforth e producertomaintaindirectcontactwithcustomerssothatquickand
accurateadjusLnentscanbemade.Direct-to-userchannelsarecommoninindustrialset-
tings,a:;aredoor-to-doorsellingandcata loguesales. Indirectchannelsaremoretypical
andresult,forthemostpmt,becauseproducersarenotabletoperfonntheiaskspmvided
bymiddlemen.(SeeFigure10.3.)
Finally,althoughthenotionofa channelofdi stributionmaysoundunlikelyfora serv-
iceproduct,suchasheal,hcareorairtravel,servic~marketersalsofacetheproblemof
