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Channel Behavior

1) Distribution channels consist of complex behavioral systems where people and companies interact to accomplish individual, company, and channel goals through both informal and formal interactions. 2) Channel behavior involves firms partnering for their common good, with each member depending on others to play specialized roles to meet consumer needs. 3) Channel conflicts can occur from disagreements over goals and roles among channel members, such as debates over pricing or advertising territories between dealers.

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222 views2 pages

Channel Behavior

1) Distribution channels consist of complex behavioral systems where people and companies interact to accomplish individual, company, and channel goals through both informal and formal interactions. 2) Channel behavior involves firms partnering for their common good, with each member depending on others to play specialized roles to meet consumer needs. 3) Channel conflicts can occur from disagreements over goals and roles among channel members, such as debates over pricing or advertising territories between dealers.

Uploaded by

LakkhanRobidas
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Channel Behavior and Origination

Distribution channels are more than simple collections of firm tied together
by various flows. There are complex behavioral systems in which people and companies interact
to accomplish individuals, company and channel goals. Some channel system consists only of
informal interactions among loosely organized form. Other consists of formal interaction guided
by strong organization structures. Moreover, channel system does not stand still –new type of
intermediaries emerges and whole new channel systems evolve.

Channel behavior: a marketing channel consists of firm that


have partnered for their common goods. Each channel member depends on others.

For example; a ford dealer depends on ford to design car that meet consumer needs.

Each channel member plays a specialized role in the channel.

Channel conflict: Disagreement among marketing channel


members on goals and roles –who should do what and for what reward.

Horizontal conflict occurs among firm at the same level of the channel.

For example: some ford dealer in Chisago might complain that their other in the city steals sales
from them by pricing too low or by advertising outside their assigned territories.

Channel Dynamics
A conventional distribution channel: A conventional distribution channel consists of one or
more products, wholesaler, and retailers. Each is a separate business seeking to maximize its own
profits, perhaps even at the expense of system as a whole.

1. Vertical marketing system: A distribution channel structure in which products,


wholesalers, and retailers act as a unified system. One channel member owns the others,
has contracts with them or has so much power that they all cooperate.
a. Corporate VSM: A vertical Market System that combines
successive stages ownership, channel leadership, established
through common ownership.
b. Contractual VMS: a vertical marketing system in which
independent firm at different level of production and
distribution join together through contracts to obtain more
economics or sales impact then they could achieve alone .
c. Administrated VSM: a vertical marketing system that
coordinates successive stages of production and distribution ,
not through common ownership or contractual ties, but through
the size and power of one of the parties
2. Horizontal Marketing system: A channel arrangement in which two or more companies
at one level join together or follow a new marketing opportunity.
3. Multichannel distribution system: A distribution system in which a single firm sets up
to one or more customer segments. Multichannel distribution often called hybrid
marketing channel.

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