What Work is Performed by Marketing Channels? 239
manufacturers’ redemption centers, community groups, traditional intermediaries
such as soft-drink intermediaries, trash-collection specialists, recycling centers, trash-
recycling brokers, and central-processing warehousing.^4
Service Sector Channels
The concept of marketing channels is not limited to the distribution of physical goods.
Producers of services and ideas also face the problem of making their output available
and accessible to target populations. For instance, schools develop “educational-
dissemination systems” and hospitals develop “health-delivery systems.” These institu-
tions must determine agencies and locations for reaching a population that is spread
out over an area. Similarly, many states face the problem of locating branch campuses
to serve a burgeoning and increasingly well-educated population, just as cities must
find ways of creating and locating playgrounds children.^5
As Internet technology advances, service industries such as banking, travel,
and securities trading are putting more emphasis on this fast-growing channel.
Consider the decisions faced by Merrill Lynch, a full-service, full-price brokerage
firm that traditionally sold stocks and bonds through its 17,000 commissioned bro-
kers. After watching discount broker Charles Schwab grab an early—and sizable—
head start in on-line securities trading, Merrill Lynch fought back by launching its
Merrill Lynch Direct Web site (www.mldirect.ml.com). This site allows the firm’s
customers to access financial data and trade securities without their brokers, at fees
well below the firm’s standard commission rates. In embracing this channel, Merrill
Lynch is seeking to retain customers who want to trade electronically; at the same
time, the firm needs to use its Internet presence to bring in new customers without
cannibalizing transactions that otherwise would have been handled by its brokers at
full commission.^6
Figure 5-3 Consumer and Industrial Marketing Channels