Directorate of distance education

Identifying the Major Channel Alternatives
A channel alternative is described by three elements:
1. Types of Intermediaries.
Depends on the service outputs desired by the target mkt & the 
channel’s transactions costs. The company must search for the channel 
alternative that promises the most long-run profitability. 
2. Number of Intermediaries.
Company has to decide on the number of middlemen to use at each 
channel level. Three strategise are available
➢ Intensive Distribution:- Producers of convenience goods etc. 
typically seek intensive distribution that is stocking their product 
in numerous outlets. These goods must have place utility.
➢ Exclusive Distribution:- Some producers limit the number of 
intermediaries handling their products. Through exclusive 
distribution the manufacturer hopes to obtain more aggressive 
and knowledgeable selling and more control over intermediaries 
polices on prices, promotion, credit and various activities.
➢ Exclusive distribution
➢ Selective 
➢ Intensive 
3. Terms & Responsibilities of Channel Members
The producer must determine the rights & responsibilities of the 
participating channel members, making sure that each channel member is 
treated respectfully & given the opportunity to be profitable. 

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Evaluating the Major Channel Alternatives
Each alternative needs to be evaluated against three criteria.
1. Economic Criteria 
➢ The first step is to determine whether a company sales force or a 
sales agency will produce more sales.
➢ The next step is to estimate the costs of selling different volumes 
through each channel.
➢ The final step is comparing sales & costs.
Each channel will produce a different level of sales & costs. 
2. Control Criteria
The agents may concentrate on other customers’ products or they 
may lack the skills to handle our products. 
3. Adaptive Criteria
The channel members must make some degree of commitment to 
each other for a Specified period of time. 
Channel-Management Decisions
After a company has chosen a channel alternative, individual 
intermediaries must be selected, motivated & evaluated.
Selecting Channel Members
For some producers this is easy; for others it’s a pain in the ass. 
Anyway, in order to select them, producers should determine what 
characteristics distinguish the better intermediaries (years in business, 
other lines carried, solvency, reputation, etc.)