7 good questions on "The Nature and Importance of Marketing Channels"

What can a distribution channel do for a company in a positive way?
Guarantee long-term commitment to other firms.
What's the difference between a conventional marketing channel and vertical marketing system?
A conventional marketing channel are firms who work separately from each other and seek to maximize their own profit. No channel member has much control over the other members.

A vertical marketing system consists of firms who act as a unified system. One channel member owns the others, has a contract with them or wields so much power the others must cooperate. This is more effective, because together they have more bargaining power.
Why do firms count so much for their intermediary partners?
Because they garantee specialization, experience and higher scale of operation.
We distinguish corporate, contractual and administered VMS. What's the difference?
Within a corporate VMS production and distribution belongs to single ownership. Coordination and conflict management are stained through regular organizational channels. The corporate VMS brings control and flexibility.

Within a contractual VMS independent firms collaborate through contracts to obtain more economies of scale. The franchise organization is the most common type of contractual VMS.

Within an administered VMS firms collaborate due to size and power of one or a few dominant channel members.
What is the role of distribution channels?
To provide the large quantity of products produced by producers to customers via its intermediaries in smaller quantities and different range of assortment.
We distinguish direct, retail, wholesale and agent channels. What's the difference?
In a direct channel the producer goes directly to the customer without intermediairs.

In a retail channel retailers who are channel partners, e.g. Cars, clothing, supermarket.

In a wholesale channel are consumer products e.g. Hardware, tobacco, confectionary.

The agent channel is often used to products intended for mass production, e.g. Processed food.
How is the complexity determined in these channels?
The higher the number of intermediaries, the more complex the channel is.
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