1. BSAD 113 CHANNEL STRUCTURE Lars Perner, Instructor 1 CHANNEL STRUCTURE AND MEMBERSHIP n Whether to use intermediaries n Some potential channel structures n Types of intermediaries to be used n Parallel (dual) distribution decisions n Evaluating channel performance

2. BSAD 113 CHANNEL STRUCTURE Lars Perner, Instructor 2 When To Use Intermediaries n High demand for assortment and variety n Low volume purchases by individuals n Others can more efficiently run logistics

3. 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

4. BSAD 113 CHANNEL STRUCTURE Lars Perner, Instructor 4 Types of Intermediaries That Should be Used--Criteria n Cost effective relative to service provided n Compatible with product image n Mutual benefit –compensation –“piggy-backing” or reciprocal “piggy- backing”

5. BSAD 113 CHANNEL STRUCTURE Lars Perner, Instructor 5 Parallel Distribution Structures MANUFAC- TURER DISTRI- BUTOR RETAILER MAJOR CHAIN (e.g., Wal-Mart) FACTORY OUTLET DIRECT MARKETING

6. BSAD 113 CHANNEL STRUCTURE Lars Perner, Instructor 6 Evaluating Channels n Service output fulfillment n Assignment of channel flows to lowest cost performer (subject to quality standards) n Timeliness and quality of members n Compliance with equity principle