A manufacturer may choose to sell through own direct channels or through indirect channels,
the latter often controlled through a franchise agreement. It has been suggested that indirect
channels, guided by an incentive structure that essentially reflects market forces external to
the organization, perform better financially than direct channels. Despite this, manufacturers
increasingly use direct channels and, to the extent they exist, exert strong control over
indirect channel partners, thus running the risk of undermining their retailers’
There seems to be other rationales for designing direct channels than those suggested by
marketing channels research. This paper seeks explanations to why manufacturers are using
direct channels in the characteristics of contemporary markets.
The results suggest a number of exploratory rationales for direct channels in today’s markets.
Supply-demand conditions have shifted and manufacturer overcapacity is now commonplace.
Consumer loyalty has decreased in the aftermath of an increase in the number of products
available. Establishing a consistent brand identity in all areas that communicate with
consumers is a top priority of many companies. Through direct channels, or tightly controlled
indirect channels, the manufacturer can make sure the brand is adequately exposed while
sales targets are reached. All in all, a very different set of criteria appears to guide
manufacturers’ channel design decisions.
2011. 1-23 p.