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

Place and Development of Channel Systems 313

heated up, electronics stores wanted a piece of the action, and they were willing

to take a smaller markup. Now that the market is much more established, many

cellular service providers are finding it cheaper to sell from a website or use their

own salespeople.^9

Specialists should develop to adjust discrepancies if they must be adjusted.But

there is no point in having middlemen just because that’s the way it’s been done

in the past. Sometimes a breakthrough opportunity can come from finding a better

way to reduce discrepancies—perhaps eliminating some steps in the channel. Many

small manufacturers of business products can now reach more customers in distant

markets with an Internet website than it was previously possible for them to reach

with independent manufacturers reps who sold on commission (but otherwise left

distribution to the firm). If it costs the firm less to establish an order-taking web-

site and advertise it by e-mail, at an industry community site, or in a trade magazine,

the cost advantage can translate to lower prices and a marketing mix that is a bet-

ter value for some target segments.^10

A channel captain can improve

the performance of the whole

channel—by developing

strategies that help everyone in

the channel do a better job of

meeting the needs of target

customers at the end of the

channel.

Channel Relationship Must Be Managed

Middlemen specialists can help make a channel more efficient. But there may be

problems getting the different firms in a channel to work together well. How well

they work together depends on the type of relationship they have. This should be

carefully considered since marketing managers usually have choices about what type

of channel system to join or develop.

Ideally, all of the members of a channel system should have a shared product-

market commitment—with all members focusing on the same target market at the

end of the channel and sharing the various marketing functions in appropriate ways.

When members of a channel do this, they are better able to compete effectively for

the customer’s business.

This simple idea is very important. Unfortunately, many marketing managers

overlook it because it’s not the way their firms have traditionally handled relation-

ships with others in the channel.

Marketing manager

must choose type of

channel relationship

The whole channel

should have a product-

market commitment