The decisions on channel have a vital bearing on other decisions relating to marketing. Pricing decisions, for example, are related to the channel pattern adopted by the firm and the compensation paid to the channel. Similarly, decisions on sales force, its size, type, etc., depend on the nature and size of the marketing channel adopted. The channel pattern influences the pattern of salesmen’s operations. It also determines to a significant measure the size and complexity of the marketing department of the firm.
Channel decisions usually bind the firm with long-term commitments. The channel types and the number of levels/ tiers in the channel cannot be changed every now and then. For example, once a firm has developed a marketing channel of its own, with company’s own stock points performing the wholesaling/semi-wholesaling task, and dependence on external channel limited to retailing activity alone, it cannot all of a sudden switch to a sole-selling agent system or even a wholesaler-retailer system. Having invested heavily in company’s own stock points/depots, the firm cannot suddenly extricate itself from the commitments already made. Basically; once a firm adopts a particular channel model and goes along with it for some time, exiting the model will be difficult.
Channel ‘Levels’, Channel ‘Members’, and Channel ‘Length’ All marketing intermediaries do not operate at the same tier; they operate at different tiers. Each distinctive tier of intermediaries is referred to as a ‘level’ in the channel; and each link is referred to as a ‘channel member’. The number of ‘levels’ determines the ‘length’ of the channel; the more the levels, longer is the channel. The number of ‘members’ does not determine the ‘length’ of the channel.
