Page 585 - Business Principles and Management

Unit 6

FIGURE 21-4 Five Possible Channels for the Sale of Magazines to Consumers

MAGAZINE PUBLISHER

Internet Direct Mail Subscription
Subscription Subscription Service News Agency News Agency

Newsstands Supermarkets
at Hotels & Convenience
& Airports Stores

CONSUMER

as directly as possible. Refiners own some gasoline retail outlets.
Products that are highly complex and need experts to install and repair
also require short channels. Manufacturers of large computer systems,
for example, sell directly to users.
• Number of users. The greater the number of users of a product, the more
channel members there probably are. For instance, a manufacturer of steel
is likely to sell directly to a few large users, whereas a shoe manufacturer
may sell to wholesalers that then distribute to a variety of retail businesses.
• Number of types of products manufactured. A producer with only one
product, such as pottery, will probably sell to a wholesaler. It is too ex-
pensive to maintain a sales force large enough to contact all retailers in
the country. But if a producer manufactures a large number of electrical
products, such as coffeemakers, clocks, heaters, and toasters, it might sell
directly to large retailers that handle all of these products. The marketing
costs can be distributed over many products.
• Financial strength and interests of the producer. Large companies that are
strong financially are better able to perform the marketing activities re-
quired to move goods from producer to consumer through the least num-
ber of channel members. They may find it more profitable to handle the
marketing activities within the company rather than using other busi-
nesses. They also have more control over the channel rather than relying
on others to perform many of the activities.
Channel decisions, like other marketing decisions, require careful study and
are subject to change. With all the recent advances in technology, transportation
and storage facilities, and retail methods, producers are constantly looking for
more efficient ways to market their goods.

CHECKPOINT
List six factors that producers consider when deciding which
channel or channels to select for distributing their products.

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