Marketing Channel Strategy



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Marketing Channel Strategy An Omni-Channel Approach

intermediary
encompasses any channel member other than the manu-
facturer or end-user. We differentiate three general types: wholesaler, retailer, and 
specialized.
Wholesalers
Wholesalers include merchant wholesalers or distributors, manufacturers’ repre-
sentatives, agents, and brokers. A wholesaler sells to other channel intermediaries
such as retailers, or to business end-users, but not to individual consumer end-users. 
Chapter 7 discusses wholesaling in depth. Briefly, though, we note that merchant 
wholesalers take title to and physical possession of inventory, store inventory 
(frequently from multiple manufacturers), promote products in their line, and 
arrange for financing, ordering, and payment by customers. They earn profits 
by buying at a wholesale price and selling at a marked-up price to downstream 
customers, then pocketing the difference (net of any distribution costs they bear). 
Manufacturers’ representatives, agents, and brokers rarely take title to or physical 
possession of the goods they sell (e.g., real estate agents do not buy the houses 
they have been enlisted to sell); rather, they engage in promotion and negotiation 
to sell the products of the manufacturers they represent and negotiate terms of 
trade for them. Some intermediaries (e.g., trading companies, export management 
companies) specialize in international selling, regardless of whether they take title 
or physical possession; we elaborate on these intermediaries in Chapter 9.
Retail Intermediaries
Retailers come in many forms: department stores, mass merchandisers, hyper-
markets, specialty stores, category killers, convenience stores, franchises, buying 
clubs, warehouse clubs, direct retailers—to name just a few. Unlike purely whole-
sale intermediaries, they sell directly to individual consumer end-users. Their role 
historically entailed amassing an assortment of goods that would appeal to consum-
ers, but today that role has greatly expanded. Retailers might contract to produce
private-label goods, such that they achieve effective vertical integration upstream in 


The OmnI-ChAnnel eCOsysTem
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the supply chain. They also may sell to buyers other than consumers; Office Depot 
earns significant sales by selling to businesses rather than consumers (i.e., about 
one-third of its total sales), even though its storefronts nominally identify the chain 
as a retailer. In particular, Office Depot’s Business Solutions Group sells services to 
businesses through various routes, including direct sales, catalogs, call centers, and 
Internet sites, and it makes these business-to-business sales services available in the 
United Kingdom, the Netherlands, France, Ireland, Germany, Italy, and Belgium.
22
 
Chapter 6 discusses retailing in depth.

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