Question

LIst 5 chel tunctións. 0f all the channel functions in your list, which is the most important and why? Which is the least important and why?

Answer 1

The objectives of a channel structure is to facilitate the provision of commodities to the customers in the right quantity at the right place and at right time. The main function of the channels are

(a) It provides the right quantity to the customer by breaking the bulk. A channel members purchases in bulk from producers or higher channel members and provides it to customer in desired quantities.

(b) It bears the risk of overstocking / obsolescence, as the customer only buys desired quantity.

(c) It sorts, stores and transports the commodity to the customer location at the desired time.

(d) It facilitates the buiyng process by extending easy credit and creating ease of ownership for customers.

(e) Acts as a link between the manufacturer and customer and provides after sales support and necessary feedback.

All of the factors are important. However their relative importance depends on the type of product sold and the market structure. The most important or the basic characterstic of the channel is to provide the right quantity at right place and time, which makes point (c) the most important. The least important depends on the conditions. For example, (d) can be irrelevant for items of low value, low frequency purchase, while it can be crucial for products like an automobile or a home appliance. The risk part (b) is also relevant where the demand of commodity is unpredictable and unstable, while for non preishable items of daily use, this point is also irrelevant.