Accelerating technological change, heightened marketplace demands, more aggressive global competition, and shifts in the workforce and population demographics are affecting distribution channels, forcing companies to reconsider fundamental assumptions about how they reach their markets. The magnitude of change demands a strategic perspective that views channel decisions as choices from a continually changing array of alternatives for achieving market coverage and competitive advantage — subject, of course, to the constraints of cost, investment, and flexibility. Tactical responses, based on maintaining power balances, managing conflicts, and minimizing transaction costs to pursue greater efficiency, will not suffice.
Changes in distribution channels come slowly, partly because the inherent complexity of the many links that connect value-adding functions in a channel obscures the need for change. Distribution channels are also dauntingly rigid and stable because of powerful, persistent inertia. Faint-hearted managers, unwilling to disrupt existing channels and incur predictable short-run costs for less certain gains from a new configuration or approach, may become discouraged, resulting in a growing mismatch between the firm’s overall strategy and its means of distribution. Our main premise is that the pressures for change are overcoming the inertia in distribution channels. Customary and comfortable incremental approaches cannot cope.
Frequently, a firm’s distribution method is an appendage to its strategy — the result of opportunistic, reactive, one-by-one decisions accumulated over time and frozen by perceived barriers. Instead, the... To read the complete article, login or sign-up using the form below.
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