254 CHAPTER 10 CHANNELCONCEPTS:DISTRIBUTINGTHEPRODUCT
customers.Inshort,organizations attempttogettheirproductstotheircustomersinthemost
effectiveways.Further,ashouseholdsfindtheirneedssatisfiedbyanincreasedquantityand
varietyofgoods,themechanismofexchange-i.e., thechannel-increasesinimportance.
TheEvolutionoftheMarketingChannel
Asconsumers, wehaveclearlytakenforgrantedthatwhenwegotoa supermarkettheshelv~s
willbefilledwithproductswewant;whenwearethirstytherewillbea Cokemachine0"
bararoundthecorner;and,whenwedon' t havetimetoshop,wecanpick-upthetelephone
andorderfromtheJ.e.PenneycataiogorthroughtheInternet.Ofcourse,ifwegiveit~ome
thought,werealizethatthismagicisnota given,andthathundredsofthousandsofpeo-
pleplan,organize,andlaborlonghourssothatthismodernconvenienceis availabletoyou,
theconsumer.Ithasn'talwaysbeenthisway,anditisstillnotthiswayinmanyothercoun-
tries. Perhaps a littleanthropologicaldiscussionwillhelpourunderstanding.
Thechannelstructureina primitivecultureisvirtuallynonexistent.Thefamilyor
tribalgroupisalmost entirelyself-sufficient.Thegroupiscomposedof;ndividualswho
arebothcommunalproducersandconsumersofwhatevergOOGSandservicescanbemade
available.Aseconomiesevolve,peoplebegintospecialiLeinsomeaspectofeconomicactiv-
ity.Theyengagein farming,hunting,orfishing,orsomeotherbasiccraft.Eventually,thi::
specializedskillproduces excessproducts,whichtheyexchangeortradeforneededgoods
thathavebeenproducedbyothers.This exchangeprocessorbartermarks thebeginning
offormalchannelsofdistribution.Theseearlychannelsinvolvea seriesofexchangesbetween
twopartieswhoareproducersofoneproductandcon:mmersoftheother.
Withthegrowthofspecialization, particularlyindustrialspecialization,andwi~h
improvementsinmethodsoftransportationand communication, channelsofdistribution
becomelongerandmorecomplex.Thus,corngrowninIllinoismaybeprocessedintocorn
chipsinWestTexas,whicharethendistributedthroughoutthednitedStates. Or,turkeys
growninVirginiaaresenttoNewYorksothattheycanbeshippedtosupermarketsin Vir-
ginia.Channelsdon'talwaysmakesense.
Thechannelmechanismalsooperatesforserviceproducts.In'~hecaseofmedical
care,thechannelmechanismmayconsistofa localphy~;jcian,specialists,hospitals, ambu-
lances,laboratories, insurancecompanies,physicaltherapists,homecareprofessionals, and
soforth. Alloftheseindividualsareinterdependent,andcouldnotoperatesucces~fullywith-
outthecooperationandcapabilitiesofalltheothers.
Based onthisrelationship,wedefineamarketingchannelas''setsofinterdependent
organizationsinvolvedin theprocessofmakinga productorserviceavailableforuseor
consumption,aswellasprovidinga paymentmechanismfortheprovider."
Thisdefinitionimpliesseveralimportantcharacteristicsofthechannel.First,thechan-
nelconsistsofinstitutions,someunderthecontroloftheproducerandsome outsidethe
producer'scontrol.Yetallmustberecognized,selected,andiD.tegratedintoanefficientchan-
nelarrangement.
Second,thechannelmanagementprocessis continuousandrequiresconslan,mon-
it oringandreappraisal.Thechanneloperates 24 hoursa dayandexistsinanenvironment
wherechangeisthenorm.
Finally, channelsshould havecertaindistributionobjectivesguidingtheiractivities.
Thestructureandmanagementofthemarketingchannelisthusinparta functionofa firm's
distributionobjective.It isalsoa partofthemarketingobjectives,especiallythe needto
makeanacceptableprofit.Channelsusuallyrepresentthelargestcostsinmarketinga product.
