Page 209 - DMGT408DMGT203_Marketing Management

Marketing Management/Essentials of Marketing

Notes evaluated on the basis of the cost structure of maintaining the channel. A channel with low cost
is always preferred. The marketing manager can find out each market segment available and
service expectations in each segment before deciding which segment to serve and then decide
which channel will best serve the segment. The objectives of channel design are heavily dependent
upon the marketing and corporate objectives. The broad objectives include:
1. Availability of product in the target market
2. Smooth movement of the product from the producer to the customer
3. Cost effective and economic distribution

4. Information communication from the producer to the consumer.

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Caution Channel objectives will vary depending on the nature and characteristics of the
product. For a consumer perishable, the channel has to be short and inventorying function.
They need more direct marketing compared to bulky and heavy products, which need
longer distribution channels. For non-standardized and customized products, the company
prefers to have direct marketing network than indirect distribution. The marketing manager
should take into consideration strengths and weaknesses of different types of intermediaries
in providing desired service output levels. The channel so designed should adapt to the
larger environment. When the overall economy is passing through recession, companies
will prefer shorter channels. The channel design objectives should pass through the existing
legal and ethical practices followed in the country of operation.
Identification of Major Channel Alternatives

Once the desired service output level is decided and objectives and constraints of designing the
channels are decided, the marketing manager should identify alternative channels. As we have
mentioned earlier channels are of three types namely sales, delivery and service channels.
While evaluating channel alternatives, there are three issues to be addressed viz. the overall
business environment, types and number of intermediaries needed and the terms and
responsibilities of each channel member.

Types of Intermediaries

The marketing manager should identify different types of intermediaries to carry out its channel
work. We present a list of common types of intermediaries.

1. Company Sales Force: Company uses its own sales force for direct marketing. The manager
can assign sales quota for each territory and sell products directly to consumers.
2. Middlemen: Middlemen refer to just about anybody acting as an intermediary between
the producer and the consumer.
3. Agent or Broker: Intermediaries with legal authority to market goods and services and to
perform other functions on behalf of the producer are called agents or brokers. Agents
generally work for producers continuously, whereas brokers may be employed for just
any deal. In some cases, agents sell to another intermediary such as industrial distributors.
In addition, an agent or broker can work for the buyer rather than the seller. This situation
is becoming more common in real estate business.
4. Wholesaler: Wholesalers are organizations that buy from producers and sell to retailers
and organizational customers. Wholesalers primarily deal in bulk and will ordinarily sell
to the retailer or other intermediaries.

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