CHANNEL OF DISTRIBUTION

CHANNELS OF DISTRIBUTION
The marketing system of any country is made up of a vast manifestation of the organisations and individuals linked by information, product negotiations, money and people. Of these, institutions and individuals act as pipeline that connects the makers of products with people and organisations that consume the product. This pipeline or channel in the marketing system seeks to satisfy the needs and wants of target end users and objectives of the channel participants. A channel is a live organ of marketing. A channel of distribution is an organized net work or a system of agencies and institutions which, in combination, perform all the activities required to link producers with users and users with producers to accomplish the marketing task.
The word “Channel” has its origin in the French word for canal. The term “Channel of distribution” connotes a path way taken by goods as they flow from the point of production to the point of ultimate consumption.
According to Cundiff and Still, a channel of distribution is ‘a path traced in the direct or indirect transfer of title to a product as it moves from a producer to ultimate consumers.’
American Marketing Association defines a market channel as “the structure of intra company organisation units and extra company agents and dealers, wholesale and retail, through which a commodity, product or service is marketed.”
Prof. Phillip Kotler defines marketing or trade channels as “a set of independent organisations involved in the process of making a product or service available for use or consumption.” In other words, it stands for the path or route traced in the direct or indirect transfer of title to a product; as it moves from a producer to the ultimate consumer or industrial users.
According to Stanton, “A distribution channel consists of set of people and firms involved in the transfer of title to a product as the product moves from producers to ultimate consumer or business user.” It includes both the producer and the final user of the product as well as mercantile agents and merchant middlemen engaged in the transfer of the title of goods and services.
Thus, a channel of distribution is a path way directing the flow of goods and services from producers to consumers composed of intermediaries through their functions and attainment of the mutual objectives.
NOTE: Some intermediaries – such as wholesalers and retailers – buy, take title to, and resell the merchandise; they are called merchants. Others – brokers, manufacturers’ representatives, sales agents - search for customers and may negotiate on the producer’s behalf but do not take title to the goods; they are called agents. Still others – transportation companies, independent warehouses, banks, advertising agencies – assist in the distribution process but neither takes title to goods nor negotiates purchases or sales; they are called facilitators.

CLASSIFICATION OF CHANNELS
The trade channels are classified as to conventional and non-conventional.
A. Conventional channel
Conventional or individualistic channels are the fragmented networks where in the manufacturers and the consumers are loosely linked by intermediaries in the process of exchange. These intermediaries perform the usual conventional marketing functions. The conventional channel alternatives can be:
Manufacturer to consumer.
Manufacturer to Retailer to consumer
Manufacturer to wholesaler to retailer to consumer.
Manufacturer to wholesaler to Consumer
Manufacturers to agents to wholesalers to retailer to consumer.

Conventional channels namely take two shapes-direct and indirect.
A ‘direct’ channel is one which is the shortest wherein the company chooses to sell directly to the consumer without engaging any intermediary. It is commonly seen in case of mail order sales, sales by travelling salesmen and multiple shops. On the other hand, ‘indirect’ channel is one which employs the services of intermediaries in moving the goods to the consumers.


1. Manufacturer to consumer
It is the shortest and simplest channel wherein the goods are moved directly from the producers to the consumers. That is no inventory is involved. It is opted by manufacturers of consumer durable products. It is also called as direct sales.
2. Manufacturer to retailer to consumer.
Between the producer and the consumer there is an intermediary called as retailer. This is the most common channel in the case of consumer durables like textiles shoes ready garments etc.
3. Manufacturer to wholesaler to retailer to consumer.
This channel option has two intermediaries i.e. wholesaler and retailer in between the manufacturer and the consumer. The manufacturers of consumer non durables use this method of channel distribution. Here the wholesalers stock the products in different parts of the nation or a region and from there, the products are supplied in smaller quantities to the retailer and who in turn sells it to the customers.
4. Manufacturer to wholesaler to consumer.
This is a most acceptable practice when the consumers are not individual buyers but are institutional buyers such as hospitals, schools, govt. institutions etc.
5. Manufacturer to agent to wholesaler to retailer to consumer.
It is the longest indirect channel option a company has. The channel has the services of agent middlemen only next to producers who in turn sell to wholesalers and so on. This is done by companies with multiple product port folio and producing consumer non durables on large scale enjoying national and international market.
B. Non Conventional Channels
The non conventional channels may be vertically integrated or horizontally integrated.
i. Vertical integrated channels.
Vertical or vertically integrated channels of distribution are those which are professionally managed and centrally programmed networks that are pre-engineered to achieve operating economies and maximum market impact. In other words these are rationalized and capital intensive networks designed to achieve, technical, managerial and promotional economies through integration, coordination and synchronization of marketing flows from the point s of production to the final points of ultimate use.
These vertically integrated channels are of three types namely,
i. Administered
ii. Contractual and
iii. Corporate.
Administrative channel is one in which coordination of marketing activities is achieved through the use of programmes developed by one or a limited number of firms. This is generally followed by two wheeler or three wheeler or four wheeler manufacturers who direct its dealers guarantee coordinated display and merchandising to win the dealer support.
Contractual channel is one under which the independent channel components integrate their programme on contractual lines to attain the economies and enhance the market impact. That is, the outside units specializing would do the work for a price. Thus, the manufacturer hires the services of other units on contract basis.
Corporate channel is one in which the channel components are owned and operated by the same organization. Though it involves huge investment, it has the advantage of full control.
ii. Horizontal channels.
Horizontal channels is one in which two or more companies join their hands to exploit a marketing opportunity or opportunities, either by themselves or by creating an independent unit. Ex. Sugar Syndicate of India and Associated Cement Company (ACC). The reasons for horizontal integration are – the ever changing markets, cut-throat competition, changing pace of technology, excess capacity, cyclical and seasonal changes in consumer demand and the inbuilt capacity to take financial risks single handed and so on.

Efficiency in Exchanges Provided by an Intermediary
In the case of absence of intermediaries, the number of contacts is 4*4=16, whereas in the presence of intermediaries the number of contacts is 4+4=8.
The importance of channels
A marketing channel system is the particular set of marketing channels employed by a firm. Decisions about the marketing channel system are among the most critical task of every management. One of the chief roles of marketing channels is to convert potential buyers into profitable orders. Marketing channels must not just serve markets, they must also make markets.
The channels chosen affect the all other marketing decisions. The company’s pricing depends on the type of channel selected. The firm’s sales force and advertising decisions depend on how much training and motivations dealers need. In managing its intermediaries, the firm must decide how much effort to devote to push versus pull marketing. A Push strategy involves the manufacturer using its sales force and trade promotion money to induce intermediaries to carry, promote, and sell the product to end users. Push strategy is appropriate where there is low brand loyalty in a category, brand choice is made in the store, the product is an impulse item, and the products benefits are well understood. A Pull strategy involves the manufacturer using advertising and promotion to persuade consumers to ask intermediaries for the product, thus inducing the intermediaries to order it. Pull strategy is appropriate when there is high brand loyalty and high involvement in the category, when people perceive differences between the brands, and when people choose the brand before they go to the store.
Today’s successful companies are also multiplying the number of “go-to-market” or hybrid channels in the market area they serve. Hybrid channel means a company uses varieties of channels or more than one means (intermediaries) to make his s available in the market. Ex. Axis Bank enables its customers to do transactions in its branches, over the phone, or on the Internet.
Customers expect channel integration besides hybrid channels, characterized by the following features:
The ability to order a product online and pick it up at a convenient retail location.
The ability to return an online ordered product to a nearby store of the retailer.
The right to receive discounts based on total online and offline purchases.
Consumers choose to use different channels for different functions in making a purchase. Buyers generally fall into one of the four categories:
i. Habitual shoppers- purchase from the same places in the same manner over time.
ii. High value deal seekers – know their needs and ‘channel surf’ a great deal before buying at the lowest possible price.
iii. Variety loving shoppers – gather information in many channels, take advantage of high touch services, and then buy in their favorite channel, regardless of their price.
iv. High involvement shoppers – gather information in all channels, make their purchases in a low cost channel, but take advantage of customer support from a high touch channel.
Consumers may seek different types of channels depending on the particular types of goods involved. Some consumers are willing to “trade up” to retailers offering higher –end goods while these same consumers are also willing to “trade down” to discount retailers to buy private label paper towels, detergents or vitamins.
TYPES OF INTERMEDIARIES
Intermediaries are the middlemen and signify those individuals and institutions in the channel that either take title to the goods and sell at profit or do not take title to the goods but sell for a commission.
American Marketing Association defined the term “middlemen” as “one who specialize in performing operations of rendering services that are directly involved in the purchase an sale of goods in process of their flow from the producers to the users.”
Marketing intermediaries are the individuals and the organizations that perform various functions to connect the producers to the end users. The individuals and the institutions perform the functions of procurement, storage, packing, financing, transportation and counseling-in linking the two ends.














MIDDLEMEN

Merchant Agents

Wholesalers Retailers Brokers Commission Selling Forwarding Factors Auctioneers
Agents Agents & Clearing
Agents


Full Function Converter Drop Shipper


Small Scale Large Scale

Unit Street Market Cheap Syndicate
Stores Traders Traders Jacks Stores

Departmental Chain Mail order Super Cooperative
Stores Stores Houses Markets Societies








I. Merchant Middlemen
Merchant middlemen are those who take title to the goods and channelize the goods from the previous channel step to the next channel step in the pipeline. In other words, merchant middlemen buy and sell the goods by taking possession of goods, bear the risks and the price for their efforts and earn profit.
The merchant middlemen are broadly classified as wholesalers and retailers.
A. Wholesalers
Wholesaler is one who wholesales to other middlemen, institutions and individuals usually in fairly large quantities. According to American Marketing Association, ‘wholesalers sell to retailers or other merchants and/or individual, institutional and commercial users but they do not sell in significant amount to ultimate consumers.’
Functions:
a. Assembling and Buying
Assembling implies the collection of small lot of scattered agricultural production for economic bulk buying and also even bringing together stocks of different manufacturers producing same line of goods.
Buying comprises of the activities of selection of manufacturers and placing orders on them and making special purchases in cases of seasonal purchases.
b.Warehousing
Warehousing or storing is closely related to the function of assembling. As there is a gap between the time periods of production and consumption, the goods are to be held and preserved. This involves capital lock up plus risk. This warehousing by wholesalers relieves both the producers and the retailers from the problems of storage.
c. Transporting
Wholesalers undertake the transportation of goods from producers to their warehouses and back to the retailers during the course of assembling and warehousing.
d. Financing
Wholesalers undertake financing activities by granting credit on liberal terms to retailers on one hand and reduce the financial burden of the manufacturers by taking early delivery of stock from them.
e. Risk bearing
Wholesalers bear the risk of loss of change in prices, loss due to damage, deterioration in quality, pilferage, theft, fire and the like of goods held in storage. They also bear the risk of non or under payment by the retailers.
f. Providing Market Information
Wholesalers are the vital link between the retailers and the manufacturers. They provide relevant and up-to-date information to the retailers affecting their trade interest; so also they reciprocate the same to manufacturers as to wholesalers retailers feed them on changing market conditions useful for the wholesalers.
TYPES OF WHOLESALERS
Wholesalers are mainly of three types:
1. Full function
A full function wholesaler is an intermediary who buys and sells the products on his own account, assembles products from different sources in bulk, carries stock, sells in smaller lots, grants credit and renders valuable counsel and advice. Because of wide range of functions he performs and services he renders, he is called as full line wholesalers.
2. Converter
A converter is that full line wholesaler who buys products and sells them to subsequent channel members after processing them. Thus in cotton textile, he may convert gray cloth into bleached and dyed, in corns, he may convert what into wheat flours or pallets.
3. Drop-shipper
A drop shipper is that wholesaler who neither stores the products nor delivers them to the buyers from his own stock but books orders and directs manufacturers to the retailers to that effect. However, he has to take delivery of goods in case the retailer or the buyer fails to accept the same.
B. Retailers
Retailer is one whose business is to sell to consumers a wide variety of goods which are assembled at his premises as per the needs of final users. The term ‘retail’ implies sale for final consumption rather than for resale or for further processing. A retailer is the last link between the final user and the wholesaler or the manufacturers.
According to William Stanton, Retailing includes all activities directly related to the sale of goods and services to the ultimate consumers for personal or non-business use.
Thus, retailer is that merchant intermediary who buys goods from preceding channel members in small assorted lots and sells them in the lot requirements to final users.


Distinction between wholesaler and retailer
1. Wholesaler primarily sells to the dealers or industrial users whereas the retailer to the final consumers mostly the households.
2. Goods sold by the wholesalers are meant either for resale or for further processing while the goods sold by the retailers are meant for final consumption.
3. Wholesalers sell in larger quantities than retailers and the price charged by the wholesalers are lower than those of the retailers.
4. Wholesalers generally specialize in one or a few products of the same line while retailer in wide variety of products of many manufacturers.
5. Wholesalers works on reasonably low but quick returns while retailer works to higher margin over a relatively small period.
TYPES OF RETAILERS
A. Small Scale Retailers
1. Unit Stores: Unit stores are the retail stores run on proprietary basis dealing in general stores or single line stores such as drugs, clothes, grocery items, hardware, shoes, books, utensils etc. Single line stores are mostly called as specialty shops as they may specialize in one line only.
2. Street traders: These are retailers who display their stock on footpaths or the sidewalks of busy spots of cities and towns. The most prominent places are bus stands, railway stations, parks etc.
3. Market Traders: These retailers open their shops on fixed days or dates in specified areas. The time interval may be a week or a fortnight or a month. They do join fairs and festivals. They deal in general or special line stores. These retail outlet have fixed type of arrangements with built in flexibility.
4. Hawkers and Pedlars: This class of retailers has been there in all centers from the time immemorial. They do not have any fixed place of business. They carry the goods from one place to another on hand cart selling the goods from door to door. They keep on moving from locality to locality and business to business with change in season. Thus, ice candy seller has a brisk business in summer and may change over to cornflakes in rainy and winter season.
5. Cheap Jacks: Cheap jack is a retailer who has a fixed place of business in a locality but goes on changing his place to exploit the marketing opportunities. Change of locality is quite common in case of these retailers. They deal in cheap varieties of readymade garments, plastics, shoes and the like.
6. Syndicate Stores: It is an extension of the theory of mail order business on a small scale. Syndicate stores are known for widest varieties of goods in a product line but of known brands. These retailers buy most of the unbranded varieties and try to sell under their names. These apply to readymade garments, toys, machinery items and so on.
B. Large Scale Retailers
1. Departmental Stores: It is a large retail store dealing in a wide variety of goods under a single roof. It is essentially an urban retail outlet designed for mass selling sealing in almost Aspirin (medicine) to zip, mostly catering to the needs of higher income groups. It is a central location and unified control. It is known for orderly arrangement of products in separate departments and it lays emphasis on consumer service. Ex. Ebony Stores, Spencer’s, Vishal, Big Bazar etc.
2. Multiple shops and Malls: A multiple shop or a chain store is a system of branch shops operated under a centralized management and dealing in similar lines of goods. It is a chain of retail stores dealing in identical and generally restricted range of articles operating in different localities under central ownership and control. It works on the principle of centralized buying and administration and decentralized selling. The attributes of multiple shops are: cash and carry, limited lines of articles, items are consumer durables, decentralized selling in different localities. Ex. Bata Shoes, Carona shoes, Khadims shoes etc.
3. Mail order houses: As the title suggests, the seller contacts the buyer through some form of advertising. That is, the customers do not visit the sellers premises no there is personal inspection of goods before the purchase. The transaction is settled through postal medium mostly through V.P.P. or registered post. That is why, some prefer to call it as selling by post. As the goods are sent through post parcel, the article must be well known, describable, command demand and are durable in addition to high value. Ex. Patent medicines, Jewellery, Leather goods, garments are sold in this way.
4. Consumer Coopretaives: These are the retailers or stores owned by a group of consumers themselves on cooperative principles. It is an association of consumers to obtain their requirements by purchasing in bulk and selling through the stores to the member and non-member consumer. It believes in wholesale buying and retail selling at reasonable prices than prevailing in the open market. Ex. Apna Bazar, Janata Bazar etc.
5. Fair Price shops: These are the retail outlets started by the manufacturers in different cities and towns to sell at prices which are quite fair. It can be private, public, or even cooperative sector unit engaged in retail business to ensure regular equitable and adequate supply of essential commodities at just or fair prices. These are designed to meet the requirements of the weaker sections of the society. Ex. Ration.
II. Agent Middlemen
Agent middlemen are as important as merchant middlemen. Agent middlemen are those channel components who help in the transfer of goods from the hands of producers to the hands of ultimate users without acquiring the ownership of these goods, therefore, they do not assume any risk involved in marketing of goods, they operate for a commission and act on behalf of their account but render a valuable service of bringing together the buyers and sellers or assume the role of striking a transition for commission.
Types of agent Middlemen
1. Brokers: Broker is an agent who is employed to make bargains and contracts in matters of trade, commerce or navigation, between two parties for a compensation known as brokerage. He is an independent agent who negotiates bargains or agreements between two or more parties for exchange. He brings the intending buyer and the seller together. He does not take the title to the goods and hence he does not take the possession of goods. Ex. stock broker, insurance brokers etc.
Brokers render useful services like:
They bring the parties to exchange together.
They make actual arrangement for the delivery of goods.
They maintain extensive organizations to keep in touch with the suppliers and the customers.
They give valuable advice to both the parties on the issues of marketing affecting their interests.

2. Commission Agents: A Commission Agent buys or sells goods for his principal in return of a commission. He may or may not buy in his name but he does not assume any risk. He gets a fixed rate of commission for the business done. He has expert knowledge of all the commodities in which he is trading; he keeps close contact with the producers and dealers on the one hand and the market trends on the other. He procures goods as per the instructions of his principals; he gets orders and is responsible for arranging for packing, transport and delivery of goods including granting of credit and collecting the payments and dues.
He has the right to charge his principal for the costs of the goods purchased and the expenses incurred and his share agreed as commission. If he guarantees payment on goods sold on credit, he is eligible for extra commission called ‘del credere’ commission.
3. Selling Agents: Selling agents are the intermediaries who are given the exclusive franchise only for a limited market segment. He performs the functions of an independent middlemen taking overall the selling activities of a producer. He negotiates sales of merchandise produced by his principal and has full authority and control over the prices and the terms and conditions of the sale.
4. Forwarding and Clearing Agents: Forwarding and clearing agents are the middlemen employed to collect, deliver and otherwise forward goods on behalf of others. Most of the manufacturing houses, with gradual expansion and growth for their business find it necessary and economical to employ the agent, middlemen to relieve them of the tedious tasks of collection, delivery and forwarding the goods to their destinations.
5. Factors: Factor is an agent employed to sell the goods or merchandise consigned or delivered to him by or his principals for a compensation. Thus, his major role is to sell the goods assigned to him under the instructions of the principals. Since, selling is his sole responsibility, a factor has the power to sell the goods in his own name; he can sell at such prices and times he thinks best; he can sell on credit; he can receive the payment and issue valid receipts on behalf of his principals; he has the lien on goods in his possession for the charges due to him and recovery of advance payment made.
Thus, he takes possession of goods and sells in his own name for a commission. He even finances his principal by making advance payment or immediate payment.
6. Auctioneers: There are some class of products where sale by auction takes place. The products like jewellery, art pieces, land, buildings etc. are most commonly sold on auctions. Auctioneer is the legal agent of eth seller till the goods are knocked down to the highest bidder. He is the intermediary between the buyers and the sellers. His dealings are mostly on cash terms. He take s the possession of goods and remits the sale proceedings to the seller by deducting his expenses and agreed commission.
Auction sale is open to the public and therefore auctioneer is to widely give publicity from time to time regarding the place of auction and the time of auction.
FACTORS GOVERNING THE CHOICE OF CHANNELS OF DISTRIBUTION
The following factors are to be considered while selecting a channel of distribution.
Consumer
A major determinant of channel structure is whether the product is intended for the consumer or the industrial market. Industrial consumers prefer to deal directly with the manufacturer but most consumers make their purchases from the retail store. Products sold to both industrial users and the consumer market will employ more than one channel.
The geographic location and the needs of the firm’s potential market will also affect channel choice. Direct sales are possible where the firm’s potential market is concentrated in a few regions. Industrial production tends to be concentrated in a relatively small geographic region, making direct contact possible. Consumer goods are purchased by every household everywhere. Since they are numerous, geographically dispersed and purchase a small volume at a given time, middlemen must be employed to market products for them.
Shifts in consumer buying patterns will also influence channel decision. Such factors as the desire of credit, growth of after sale service, increased use of mail order houses and greater willingness to purchase from door to door salesperson will affect a firm’s marketing channel.
Characteristics of the product
Product characteristics also play a role in determining optimum marketing channels. Perishable products such as fresh produce, fruits and fashion products with short life cycles typically move through relatively short channels direct to the retailer or to the ultimate consumers. The more standardized is the product, longer is the channel. Lower the unit value of the product, the longer is the channel.
Characteristic of the manufacturer.
Companies with adequate resources-financial, marketing and managerial-will be less compelled to utilize middlemen in marketing their products. A financially strong manufacturer can hire its own sales force, warehouse its products to their customers. A firm with a broad product line is better able to market its product directly to retailers or industrial users since its sales force can offer a variety of products to its consumers.
The manufacturer’s need for control over the product will also influence channel selection. If aggressive promotion of the firm’s product at the retail level is desired, the manufacturer will choose the shortest available channel. For new products the manufacturer may be forced to implement an introductory advertising campaign before independent wholesalers will handle the item.
Environmental considerations
Firms should take into consideration the competition factors. The nature and extent of competition also affects the channel choice. An industry made up of a larger number of competitors with similar products will often experience intense competition, particularly at eth retail level.
CHANNEL CONFLICT MANAGEMENT
No matter how well the channels are designed and managed, there will be some conflict, if for no other reason that the interests of independent business entities do not always coincide. Channel conflict is generated when one channel member’s actions prevent the channel from achieving its goal. Channel coordination occur when channel members are brought together to advance the goals of the channel, as opposed to their own potentially incompatible goals.
Types of Conflict and Cooperation
The types of conflict that occurs may be:
Vertical Channel Conflict
A conflict between different levels within the same channel. HUL came in conflict with its distributors in Kerala on the issue of commissions, etc.
Horizontal channel conflict
It involves a conflict between members at the same level within the channels. Dealers frequently get into conflicts with each other for the transgression of the domain of operation and under cutting.
Multi channel conflict
It exists when the manufacturer has established two or more channels that sell to the same market. Escorts ltd. Trying to create a parallel dealership for a line of tractors in the early 1980s faced massive protests from established dealers; companies getting into online direct sales through web marketing receive boycott threats from established distributors.


CAUSES OF CHANNEL CONFLICT
It is important to identify the causes of channel conflict. Some are easy to resolve where as other are not. The major causes of channel conflict are:
Goal Incompatibility:
The manufacturer may want to achieve rapid market penetration through a low price policy. Dealers in contrast may prefer to work with high margins and pursue short run profitability.
Unclear roles and rights
Some times conflict arises from unclear roles and rights. HP may sell personal computers to large clients through its own sales force but its licensed dealers may also be trying to sell to large clients.
Differences in perception:
The manufacturer may be optimistic about the short term economic outlook and want dealers to carry higher inventory. Dealers may be pessimistic which leads to conflict.
Conflict might also arise due to intermediaries dependence on the manufacturer.
Territory boundaries and credit for sale often produce conflict.

MANAGING CHANNEL CONFLICT
As companies add channels to grow sales, they run the risk of creating channel conflict. Some channel conflict can be constructive and lead to better adaption to a changing environment, but too much is dysfunctional. The challenge is not to eliminate conflict but to manage it better.
There are several mechanism for effective conflict management. One is the adoption of superordinate goals. Channel members come to an agreement on the fundamental goal they are jointly seeking, whether it is survival, market share, high quality or consumer satisfaction. They usually do this when the channel faces an outside threat, such as more efficient conflicting channel, an adverse piece of legislation or a shift in consumers desires.
A useful step is to exchange persons between two or more channel levels. Co-optation is an effort by one organization to win the support of the leaders of another organization by inclusing them in advisory councils, board of directors and the like. When conflict is chronic or acute, the parties may have to resort to diplomacy, mediation or arbitration. Diplomacy takes place when each side sends a person or group to meet with its counterpart to resolve the conflict. Mediation means resorting to a neutral third party who is skilled in conciliating the two parties interest. Arbitration occurs when the two parties agree to present their arguments to one or more arbitrators and accept the arbitration decision.
When neither of the methods proves effective, the company or a channel partner may file a lawsuit.
Thus concluding from the above scenario, we can arrive at the following conflict management strategies:
Conflict management Strategies:
To overcome the conflict and to head towards satisfactory settlement of conflict, the firm may follow the following conflict management strategies:
Bargain Strategy
Bargain or bargaining strategy involves the use of different power bases such as reward- coercion-expertise-referral and legitimacy – to cut the intermediaries to the size or to the point of conflict resolution. Mutual trust, eagerness to give and take on the part of parties and the tolerance on the part of parties and the tolerance on the part of the negotiators are a must for its clicking.
Boundary strategy
This strategy believes in appointing some persons as liaison officers to operate the boundary where both the manufacturers and the intermediaries meet. The work of the officers is that of diplomats setting international issues and relations and attempt to analyse and interprete the company policies and kill and ill-will that is likely to arise.
Penetration strategy
Penetration strategy is an attempt to understand the attitudes of intermediaries so that their dispositions can be reshaped to the requirements of the company.
Supra-Organisational strategy
This strategy is employed to reorganize functional interdependence and need for channel membership of trader. It consists of ‘conciliation’ between the parties and other two aspects namely, ‘mediation’ and ‘arbitration’. Conciliation believes in settling the disputes and conflicts of the conflicting parties themselves. ‘Mediation’ involves active participation by the third party to settle the disputes or resolve the conflict by persuasion. In case of ‘arbitration’, the parties of conflict submit their dispute either voluntarily or compulsorily under law of agreement to a third party whose decision in final and binding on both parties.