The Evolution in Marketing Channels

The Evolution in Marketing Channels

The distribution channel is a means by which to overcome the time, place and possession gaps that separate the goods and services from the consumers. The Internet is changing the typical structure of distribution channels to close the gap in new ways. There is a trend toward disintermediation and hybrid marketing channels, and the Internet as a marketing channel may affect the types of intermediaries companies use.

The Trend Toward Disintermediation

Technological advances and the expansion on online direct marketing are impacting the nature and design of marketing channels. With disintermediation, layers of intermediaries are eliminated from a marketing channel or new types of intermediaries displace traditional resellers. A new trend witnesses product and services producers bypassing intermediaries and going directly to final buyers.

When a company develops direct channels and markets to the same customers that their own intermediaries do, they need to be careful about competition and conflict. When companies like IBM, Motorola, and furniture manufacturer Herman Miller started selling directly to customers through their own Websites, their retail dealers felt threatened they were being undercut by the new "inside channels." Resellers may be concerned that it will take away some of their business to have the manufacturer selling directly to consumers, but in many cases it is not a directly competitive.

Ford is using the Internet to market directly to consumers but they do not compete with their established channels (the dealerships). Instead, they help the dealers by removing part of the drudgery customers and salespeople had to deal with by enabling customers to pre-order th...

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...of more than one selling channel-print catalog and Internet, for instance, or Website and store-- spend a whopping 30% more than those who use one channel only. What's more, Jupiter predicts that in 2005, U.S. consumers will spend $199 billion online--but they'll spend more than $632 billion offline as a result of online research regarding their purchase. It seems, then, that a Website may be even more valuable as a catalog or store traffic driver than as a selling channel."

Review the reviewers

Catalog Age; New Canaan; Oct 2000; Moira Cotlier;

Bibliography:

Tile Maker Looks to Web for Lifesaving Jolt, Computerworld; Framingham; Oct 16, 2000; Todd R Weiss

E-Business: The Web @ Work/ Bron-Shoe Co. Wall Street Journal; New York, N.Y.; Sep 25, 2000; Patricia Davis

Review the reviewers

Catalog Age; New Canaan; Oct 2000; Moira Cotlier;