BSAD 113 CHANNEL STRUCTURE Lars Perner, Instructor 1

CHANNEL STRUCTURE AND MEMBERSHIP Whether to use intermediaries Some potential channel

structures Types of intermediaries to be

used Parallel (dual) distribution

decisions Evaluating channel

performance

BSAD 113 CHANNEL STRUCTURE Lars Perner, Instructor 2

When To Use Intermediaries High demand for

assortment and variety

Low volume purchases by individuals

Others can more efficiently run logistics

BSAD 113 CHANNEL STRUCTURE Lars Perner, Instructor 3

Potential Channel Structures (U.S.)

Agents/Brokers

Wholesalers

Retailers

Consumer

Producer

Wholesalers

Retailers

Consumer

Producer

Consumer

Producer

Retailers

Consumer

Producer

BSAD 113 CHANNEL STRUCTURE Lars Perner, Instructor 4

Types of Intermediaries That Should be Used--Criteria Cost effective relative

to service provided Compatible with

product image Mutual benefit

– compensation– “piggy-backing” or

reciprocal “piggy-backing”

BSAD 113 CHANNEL STRUCTURE Lars Perner, Instructor 5

Parallel Distribution Structures

MANUFAC-TURER

DISTRI-BUTOR

RETAILER

MAJORCHAIN

(e.g., Wal-Mart)

FACTORYOUTLET

DIRECTMARKETING

BSAD 113 CHANNEL STRUCTURE Lars Perner, Instructor 6

Evaluating Channels

Service output fulfillment

Assignment of channel flows to lowest cost performer (subject to quality standards)

Timeliness and quality of members

Compliance with equity principle