CASEAPPLICATION 277
Vertical marketingsystem Come~aboutwhena memberofthedistributionchannelassumesa
leadershiproleandattemptstocoordinatetheeffortsofthechannel.
Channelrole Defineswhatthebehaviorofthechannelmembershouldbe.
Channelconflict Personalanddirectfriction;oftensuggest"a potentialconfrontation.
Channelpower Awillingness tousc forceina relationship.
DiscussionQuestions
1.Discussthedifferencebetweenthetheoriesofthesortingconceptandthepostponementconcept.
2.Whatarethefiveimportant"flow~" thatlink channelmembersandotheragenciestogetherin
distribution? Explaineachtype.
3.Definethefollowingthreechannelfunctions:(1)transactional,(2)logistical, and(3)facilitat-
ing. Whatwouldhappentothesefunctionsifthemiddlemenwereeliminatedfromthechain-
linkingmanufacturertoconsumer"
4.Whyarechannelsofdistributionimportantforserviceproducts?
S.Comparethecharacteristicsofthethreeformsofverticalmarketingsystems:administered,con-
tractual,andcorporate.
6.Whataretheadvantagestowholesalersofcontractualarrangemcntfformingcooperativeswith
retailers?Whataretheadvantagestoretailers"
7.Whatisanancillarystructure?Whatis itsfunctioninthedistributionchanneP
8.Howdoeconomic condjtionsofinflation,recession,andshortagesimpact uponthechannelenvi-
ronment?
9.Discusssituationsinwhichchannelconflictmaybedesirable.Howshouldconflictthatproduces
negativeeffectsbemanaged?
Project
Startingwitha well-knownmanufacturer.tracethevariouschannel intermediariesemployed. Draw
a channeldiagram.
CASEAPPLICATION
CONNECTINGCHANNELMEMBERS
Brokelsareinthemidstofanidentitycrisis.Today'sbrokersrepresentmorethan3 .000manuf~.c
turer?,comprisingnearly 60 %ofallcommodityvolumeinpackagegoodsalJ.d 80 %ofU.S.grocery
warehousewithurawals.Manybrokersrankamongthetop 10 vendorsoftheirmajorretailcustomers.
Muchto theircontinuingfrustration.huwever, manymanufacturers areexperimentingwithsomecom-
binationofbrokeranddirectresourcesinanattempttodealwiththenewmarketplace.Someofthese
modelsareworking,butmanagersarenot.
"Whileeachmanufacturermustdevelopa hostofdifferentstrategiestomatchthaiofindi-
vidualcustomers, thebrokerha~theluxurytoorganizehistotalsiIategyaroundhis individualcus-
tomers,"saysNationalFoodBrokersAssociation(i':FBA)presidentandCEORobertSchwarze.Brokers
havealwaysbeenregardedfortheirlocalmarket expertise,buttherapidshifttomicromarketingis
