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Supply Side Channel

Analysis: Channel Flows

Ref: Anne T. Coughlan, Erin Anderson, Louis W. Stern, &
Adel I. El-Ansary, Marketing Channels, 7th Edition,
Prentice-Hall, Inc. (ATC)

End-User Channel Preferences

• Warehouse/ Wholesale market

• Departmental Store
• Kiosk
• Neighborhood Retail Outlet
• Street Vendor/Hawker
• Online Shop
• Home Delivery
• Salesman

As a buyer what we expect from
Outlets / Seller

As a buyer what we expect from

Outlets / Seller

Marketing Channel Outputs
(1) Warehouse Functions (storage and maintenance);
(2) Bulk-Breaking (quantity-breaking or size-breaking);
(3) Spatial Convenience (transportation or physical movement
of the product);
(4) Product Information (regarding features, ingredients, etc.
of the product; information services also include
communication services to link channel members);
(5) Tagging (price, expiry date, and date of manufacturing, etc.
Now-a-days warehouses, retailers, and/or distributors
perform this function);
(6) Sorting and Grading (sorting according to quality, weight,
size, price, design, etc.);
(7) Product Returns (reverse logistics);
(8) Promotions (formal and informal audience contact tools
including advertisement and various viral buzzes);

Marketing Channel Outputs

(9) Risking (the risk in case of product failure, unsold inventory
left with the retailers due to unexpected events, etc.);
(10) Financing (credit facilities to any participant including the
end-users, such as funding for inventory, account
receivables, factoring as well as basic assets, and
customer credit financing);
(11) Arranging (creating special situations and incentive to
facilitate product movement or sale in other than primary
business operation methods, such as trade fair);
(12) Assembly & Customization (modifying product to
customer’s specifications, or putting finished parts together
for the end-users);
(13) Merchandising (working at point of sale to increase
appeal of product assortment);
(14) Fulfillment (taking customers’ orders and provide
specialized product shipment as a value-added service); &
(15) Packaging & re-packaging

Service Output Demanded
i) Low Service Output

ii) High Service Output

• Voluntary Customer made channel Dilution

• Involuntary Customer made channel Dilution

Segmenting the Market based on

Service Output Demanded

Channel Flows

The activities or functions that produce the

service outputs demanded by end users
are called Channel Flows

Channel Flows
• What Channel Flows are performed?
• Who Performs?
• At What Levels?

i) Helps to diagnose and remedy shortcomings in the service

ii) Help to design new channel or revising existing channel
iii) Which Channel member have incurred the cost of
performing what flows helps in allocating the profits
equitably among the members

Eight Generic Channel Flows