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Activity-based costing and activity-based management

8.2 Indirect channels

 Retailers

 Wholesalers

 Resellers

 Agents

Different channels will differ in profitability.

Activity based costing information makes this possible because it
creates cost pools for activities.

Channels will use some activities but not all, and different channels will
have different ‘activity profiles’. This makes channel profitability analysis
possible and allows companies to build up distribution channel
profitability profiles. It can be possible therefore for a company to
identify costly distribution channels for low margin products or services
which they are supplying through direct channels, and which may best
be offered through indirect channels. This would result in reduced
channel distribution costs, and a better profitability profile for the
product or service.

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