Definition
A distribution channel (or marketing channel) is the path traveled by a product from the manufacturer—through any middlemen—to the end user. It includes all the activities involved in transferring the ownership of goods from the point of production to the point of consumption. [1]
A channel of distribution is an organized network (system) of agencies and institutions which, in combination, perform all the functions required to link producers with end customers to accomplish the marketing task. [2]
A channel member may be a manufacturer, wholesaler agent, distributor, or retailer. [2]
Channel member commitment is the degree to which a channel relationship is stable, loyalty has been built, and each member is willing to make sacrifices to maintain the exchange. [2]
Channel member dependence refers to a channel member‘s need to maintain a particular channel relationship in order to achieve desired goals. [2]
Channel member satisfaction is the channel member‘s affective state reflecting its overall approval or disapproval of a channel relationship with another firm. [2]
Channel control is the actual impact that a channel member achieves on an associated member’s beliefs, attitudes, and behavior. [2]
Channel power refers to the ability of a particular channel member to control or influence the decision making and behavior of another channel member, or one channel member’s potential for influence with another channel member. [2]
Channel Performance
Marketing channel performance is an outcome measure. The performance of a distribution channel can be assessed by considering a number of performance dimensions: [2]
- Channel effectiveness – How well the channel satisfies customer needs and wants, such as for lot size, delivery time, location convenience, and assortment breadth.
- Channel efficiency – How well the firm minimizes costs associated with performing necessary channel functions.
- Channel productivity – The degree to which the channels’ total investment in the various inputs necessary to achieve a given distribution objective can be optimized in terms of outputs.
- Channel profitability – Based on the financial performance of channel members in terms of ROI, liquidity, leverage, growth in sales and profits, etc.
See Also
Channel (media)
Channel margin
Distribution metrics
References
- Govoni, N.A. Dictionary of Marketing Communications. Sage Publications (2004).
- American Marketing Association, AMA Dictionary.