A Note on Manufacturers' Choice of Distribution Channels

Many marketing problems are usually analysed in verbal terms only. For instance, different alternatives as regards the marketing routes, or channels, through which goods and services or their titles flow, are mostly considered in terms of “advantages” and “disadvantages”. Recently, however, techniques aiming at quantification—such as linear programming and search theory—have been gaining favor. This essay purports to clarify, in quantitative terms, some of the considerations that may underlie a manufacturer's choice of distribution channels. We shall limit ourselves to a comparison of two alternatives, namely selling through wholesalers and selling directly to retailers.