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Back 2 School > Marketing > Channel Management

Distribution Channel Functions

Distribution channels are notable because they represent the first significant manifestation of a market framework. A distribution channel moves goods and services from producers to consumers. A distribution system comprises one or more distribution channels. They are the primary delivery paths and overcome major time, place and possession vacuums that separate goods and services.

The key functions performed by the members of the marketing channel are:

  • Information: Assimilating and disseminating marketing research, and intelligence information about factors and forces in the marketing environment, needed for planning and aiding exchange.
  • Promotion: If an offer is to be made, the initiation and persuasive communications have to be developed.
  • Contact: Developing contacts with existing and potential buyers from the available database.
  • Matching: This is an important function because the order has to be made according to buyers’ specifications. This also includes precautionary measures like grading, sampling and packaging.
  • Negotiation: A win-win situation for both buyer and the seller where they agree on a mutually set price and other terms of the offer. This is done in order to transfer the ownership or possession.

Other functions:

  • Physical distribution: Transporting and storing goods.
  • Financing: Acquiring and using funds to cover the costs of the channel work.
  • Risk taking: Risk, which is an important element of business, has to be taken into consideration for carrying out the channel work.

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