Distribution Channel Functions

The distribution channel moves services and goods from producers to consumers. It overcomes the major place, time and possession gaps that separate services and goods from those who would utilize them. Members of the marketing channel perform many key functions:

• Information: collecting and distributing marketing research and intelligence information regarding forces and actors in the marketing environment required for planning and aiding exchange.
• Promotion: spreading and developing persuasive communications regarding an offer.
• Contact: discovering and communicating with prospective buyers.
• Matching: fitting and shaping the offer to the buyer's requirement, by including activities like grading, manufacturing, assembling, and packaging.
• Negotiation: attain an agreement on price and other terms of the offer so that or possession or ownership can be transferred. Others help to fulfil the completed transactions:
• Physical distribution: storing and transporting goods.
• Financing: by acquiring and using funds to cover the costs of the channel work.
• Risk taking: supposing the risks of carrying out the channel work.

The question is not whether these functions require to be performed-they have to be-but instead who will perform them. To the extent that the producer performs these functions, its costs rise and its prices must be higher. At the similar time, while some of these functions are shifted to intermediaries, the producer's prices and costs may be lower, but the intermediaries has to charge more to cover the costs of their work. In isolating the work of the channel, the many functions should be assigned to the channel members who may perform them most effectively and efficiently to provide satisfactory assortments of goods to target consumers.