| Summary: | 碩士 === 國立政治大學 === 經營管理碩士學程 === 90 === Different industries have their preferred norms for arranging their distribution channels; one may sell products through exclusive channel partners, while another sells products through multiple channel partners. When addressing channel arrangement issues, is there any rule of thumb that we can employ in decision making? If so, can we justify our decisions based on this rule? Many researchers who are interested in the field of industrial organization have explored similar topics from different points of view; based on their findings, I will further examine and illustrate the relative factors influencing the decision making of channel managers.
We will address the issue of optimal channel arrangement from a principal’s point of view. A principal is deemed as a brand owner and will be treated as a wholesaler in this study. He may also be a manufacturer and may need to decide on an optimal channel structure for maximizing its total profit return.
We assume that the principal initially knows little about the market; therefore, it needs to work with channel partners there. The selected partners in this study, besides being in charge of delivering goods to end users, will be the only firms that can carry out business promotion when needed. We will treat them as retailers throughout this study.
A principal will become acquainted with his market as his business grows, and he will review whether his current distribution channel works properly for him. This channel evolution issue is important for a channel manager, but we will not focus on it here.
We know that when retailers consider whether to establish business relationships with certain principals, their greatest concern is how much profit they can get by doing so. Some other issues, such as how strong the demand is for their products or services in the market, the competition among all the available products, and how long their business relationships can be sustained, are also important to our retailers, but here we will restrict our attention to the profit they can earn and the duration of their business relationship.
We will review the existing literatures on the commonly discussed channel issues first. After that, we will develop a model which takes into consideration the influence that promotion has on market demand in order to illustrate our thinking on the possible interactions among our channel members, which will be useful in determining appropriate channel structures. We will also briefly discuss some possible directions for further research.
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