Distribution Channel Functions

Distribution Channel Functions
The distribution channel moves goods and services from producers to consumers. It overcomes
the major time, place, and possession gaps that separate goods and services from those who would
use them. Members of the marketing channel perform many key functions:
• Information: gathering and distributing marketing research and intelligence information
about actors and forces in the marketing environment needed for planning and aiding
exchange.

• Promotion: developing and spreading persuasive communications about an offer.

• Contact: finding and communicating with prospective buyers.

• Matching: shaping and fitting the offer to the buyer's needs, including activities such as
manufacturing, grading, assembling, and packaging.
• Negotiation: reaching an agreement on price and other terms of the offer so that ownership
or possession can be transferred.
Others help to fulfill the completed transactions:
• Physical distribution: transporting and storing goods.
• Financing: acquiring and using funds to cover the costs of the channel work.
• Risk taking: assuming the risks of carrying out the channel work.

The question is not whether these functions need to be performed—they must be—but rather who
will perform them. To the extent that the manufacturer performs these functions, its costs go up
and its prices have to be higher. At the same time, when some of these functions are shifted to
intermediaries, the producer's costs and prices may be lower, but the intermediaries must charge
more to cover the costs of their work. In dividing the work of the channel, the various functions
should be assigned to the channel members who can perform them most efficiently and effectively
to provide satisfactory assortments of goods to target consumers