CHANNEL
BASICS
38
sellers without an already established brand name would be unable to generate
many sales. For example, consumers perceive product quality as higher when they
can access products through retailers with strong reputations.
2
This type of guaran-
tee
is needed, because end-users rarely have enough information to know whether
to believe manufacturers’ claims about the nature and quality of their products.
Nor can manufacturers be certain that they are reaching the right kinds of end-user
through their promotional efforts. Intermediaries such as retailers thus facilitate
search on both sides of the channel.
EXAMPLE: COBWEB DESIGNS (UK)
Cobweb Designs, a high-quality needlework design firm headquartered in Scotland, is the sole
licensee for needlework kits relating to the Royal Family, the National Trust for Scotland, the
architect Charles Rennie Mackintosh, and the great socialist writer and designer William Morris.
Cobweb’s needlework kits are available at all retail outlets of the National Trust for Scotland,
as well as on the company’s website (www.cobweb-needlework.com), but
its proprietor Sally
Scott Aiton also wanted to reach the large, dispersed market of potential buyers in the United
States. Aiton sought retail placements in gift shops at major art museums and botanical gardens.
Gaining shelf space in a gift shop of a museum like the Smithsonian Institution in Washington,
D.C. or the Art Institute of Chicago could greatly enhance the company’s sales reach, because
U.S. consumers who do not frequently travel to the United Kingdom
still could find the compa-
ny’s designs (or become aware of them). Such retailers, which offer compelling brand images on
their own, thus facilitate the search process on the demand side: a consumer seeking museum-
reproduction needlework kits knows that she can find them at museum shops, along with other
museum-reproduction products. Similarly, from Cobweb’s
point of view, museum shops have
images that are consistent with the high quality of Cobweb Designs’ kits, such that they are
likely to attract visitors who tend to represent Cobweb’s target market. Such access to a broad
base of viable buyers again facilitates search, this time from the manufacturing
end of the chan-
nel. In short, the intermediary (retail museum shop) becomes the “matchmaker” that brings the
buyer and seller together.
Sorting
Independent intermediaries perform the valuable function of
sorting goods and
thus resolving the natural discrepancy between the assortment of goods and ser-
vices produced by a manufacturer and the assortment demanded by the end-user.
This discrepancy arises because manufacturers typically
produce a large quantity
of a limited variety of goods, whereas consumers demand only a limited quantity
of a wide variety of goods. Intermediaries can
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