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Thursday, 4 October 2018

Some Generalization About Distribution Channel



1) Channel design should begin with the final consumer and work backward to the producer, because channels of distribution should be determined buy consumer buying habits.

2) The channels finally selected must be totally appropriate the basic objectives of the firm's marketing program. If management sets as its goal the widest possible distribution of its product line then obviously an exclusive franchise policy at the retail level is not an appropriate strategy.

3) The channels provided a firm with access to a predetermined share of the market. A manufacturer of golfing equipment seeking the broadest possible market would make a mistake by using a channel strategy that includes only large department stores and sporting goods stores at the retail level.

4) The channels must be flexible enough so that so that the use of one channel does not permanently close off another. A manufacturer of small appliances( irons toasters), for example, distributed only through appliance wholesalers, which in turn distributed to appliance retailers. The company had an offer from a drug chain to buy the products directly from the manufacturer. The appliance retailers threatened to discontinue the line if the manufacturer placed it in drug stores. The producer decided to turn down the drug chains offer. Subsequently, a competitive manufacturer accepted a similar offer and profited considerably.

5) There is a high degree of independence among all firms in the channel for any given product. There can be no weak link in the chain if it is to be successful full stop

6) Channels of distribution and middle men are always on trial occur constantly. Middlemen survive only when their existence is economically sound and socially desirable. Furthermore,new middlemen and channels arise tudu new jobs or to the existing jobs better.