The Internet is a distribution channel. It has become highly involved with the exchange of goods and services and other transactions that had only been done in person before. In fact, the ease of use, speed, and efficiency of the Internet have made it one of the most used channels of distribution.
The functions of channel intermediaries are to efficiently reduce distribution costs and time. They should also create value for the customer.
Disintermediation is the elimination of an intermediary. Through disintermediation, customers can expect lower prices and better lines of communication between buyers and sellers.
The distribution levers and their impact on the relationship between intermediaries and buyers and sellers are as follows:
Awareness
1. Number of Intermediaries – greater awareness because the firm is accessible via more outlets.
2. Number of Channels/ Intermediary Type – greater variety of distribution channels increase market coverage and therefore awareness
Exploration/ Expansion
3. Degree of Channel Integration – as integration increases, the willingness to explore the potential for a relationship increases
4. Number of Channels/ Intermediary Type – likelihood of exploration increases as the number of channels increase
Commitment
5. Degree of Channel Integration – customers expect to be treated in a holistic sense, rather than on a per-transaction basis
6. Intermediary Type – manufacturers that go direct have greater control over the brand’s marketing strategy and are more likely to generate commitment
7. Number of Channels – customers often have different buying requirements based on the purchase situation, and their requirements can evolve over time as they grow older or their life situation changes
8. Intermediary Functions and Responsibilities – functions and responsibilities that can lead to greater commitment include customer representative training, sales incentives that focus on customer satisfaction and increased margins
Dissolution
9. Elimination of Channel Types – customers of eliminated channel type will complain or leave
10. Reduction in the Number of Intermediaries – customers will find it more difficult to purchase the firm’s products and will complain or exit
11. Reduction in Channel Integration – customers being treated based only on part of their transactions, they are less likely to feel connected to the firm or brand, and dissolution is likely to follow