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Channel StructureChannel structure may be viewed as a function of product life cycle, logistics systems, effective communication networks, product characteristics, or firm. However, the most detailed theory of channel structure was developed by Louis P. Bucklin, who staled that the purpose of the channel is to provide consumer's with the desired combination of its outputs (i.e., lot size, delivery time, and market decentralization) at minimal cost. Consumers determine channel structure by purchasing combinations of service outputs. The best channel forms when no other group of institutions generates more profits or more consumer satisfaction per dollar of product cost. Bucklin concluded that functions will be shifted from one channel member to another in order to achieve the most efficient and effective channel structure. The factors that might influence channel structure include: - Outsourcing. - Posponement and speculation. - Speed. - Technological, cultural, physical, social, and political factors. - Physical factors – geography, size of market area, location of production centers, and concentration of population. - Local, state, and federal laws. - Social and behavioral variables.
4.5 Flows in the Channel of Distribution Channel of Distribution An example of the various channels of distribution that a manufacturer of grocery products might use is shown in Figure 4-1. The manufacturer sells its products to wholesalers, chain stores, cooperatives, and the military. The wholesalers and coops service retail accounts. Accounts are serviced by a national sales force. Product and Information Flows Figure 4-1 illustrates the product and information flows that take place in a channel. Remember the product flows take place only after information flows are initiated. In addition to product and information flows, payments for the merchandise and promotional inventories back in the channel. The quality and speed of the information flows determine the safety stock held at each level of the channel.
Date: 2015-01-02; view: 1005
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