Channel Management | Distribution Strategy, Intermediaries & Channel Design Quiz | 100+ MCQ with Answers
Q1. Which statement best describes the purpose of marketing channels?
A. To reduce product features before sale
B. To enable products to reach end users through various pathways
C. To increase manufacturing costs
D. To replace wholesalers entirely
✅ Answer: B. To enable products to reach end users through various pathways
Q2. What does the phrase “you can eliminate the middleman, but not the middleman’s functions” imply?
A. Intermediaries are never useful
B. Producers must always sell directly
C. Channel functions must be performed by someone, even if intermediaries are removed
D. Middlemen create unnecessary costs
✅ Answer: C. Channel functions must be performed by someone, even if intermediaries are removed
Q3. Which of the following is NOT typically a core channel function?
A. Demand generation
B. Physical distribution
C. Product financing
D. Corporate taxation
✅ Answer: D. Corporate taxation
Q4. In a multichannel environment, what additional responsibility often falls upon the direct sales force?
A. Auditing competitor finances
B. Training distributor personnel
C. Approving final consumer pricing
D. Issuing import licenses
✅ Answer: B. Training distributor personnel
Q5. Which channel member usually takes title to goods and assumes ownership risk?
A. Broker
B. Agent
C. Distributor
D. Value-added reseller only
✅ Answer: C. Distributor
Q6. Why are distributors considered cost-efficient in many industries?
A. They have unlimited financial resources
B. Their economies of scope reduce total system cost
C. They eliminate the need for marketing
D. They always provide exclusive support
✅ Answer: B. Their economies of scope reduce total system cost
Q7. A manufacturer’s rep (MR) is best described as:
A. A salaried employee of the supplier
B. A commission-based seller who does not take title
C. A subsidiary-owned distributor
D. A temporary broker
✅ Answer: B. A commission-based seller who does not take title
Q8. Brokers differ from MRs primarily in that brokers:
A. Take title to goods
B. Represent fewer suppliers
C. Work for longer contract periods
D. Typically represent many producers for short periods
✅ Answer: D. Typically represent many producers for short periods
Q9. Which factor makes channel management dynamic and complex?
A. Fixed channel structures
B. Market changes that require new channel policies
C. Lack of competition
D. Zero switching costs for intermediaries
✅ Answer: B. Market changes that require new channel policies
Q10. What is a common risk when altering established channel arrangements?
A. Reduced product complexity
B. Disruption of reseller relationships and revenues
C. Lower financial efficiency
D. Higher customer loyalty
✅ Answer: B. Disruption of reseller relationships and revenues
Q11. What best characterizes the “tug-of-war” in supplier–reseller relationships?
A. Both parties always pursue identical goals
B. Both cooperate and compete for margins and control
C. Suppliers hold all power
D. Resellers hold all power
✅ Answer: B. Both cooperate and compete for margins and control
Q12. Which element MOST influences how the supplier–reseller seesaw tilts?
A. Retail store aesthetics
B. Weather patterns
C. Profitability and brand pull power
D. Government subsidies
✅ Answer: C. Profitability and brand pull power
Q13. “Entangling alliances” refers to:
A. Suppliers using only exclusive distributors
B. Resellers carrying only one brand
C. Producers and resellers participating in overlapping channel networks
D. Government mandated channel controls
✅ Answer: C. Producers and resellers participating in overlapping channel networks
Q14. A reseller evaluating whether to add a new supplier’s product must consider:
A. Only consumer demand
B. Only working capital required
C. Impact on existing supplier relationships
D. Only shelf space limitations
✅ Answer: C. Impact on existing supplier relationships
Q15. The control–resources trade-off implies:
A. More intermediaries → more supplier control
B. More intermediaries → less supplier control
C. Fewer intermediaries → less supplier resource burden
D. Supplier control is unaffected by channel length
✅ Answer: B. More intermediaries → less supplier control
Q16. Why might a supplier prefer multi-tier distribution?
A. High need for control
B. Strong financial resources
C. Low need for control + limited financial resources
D. Desire to eliminate market access
✅ Answer: C. Low need for control + limited financial resources
Q17. Which quadrant in Figure B suggests a direct sales force is most appropriate?
A. Low control need, low resources
B. High control need, high resources
C. Low control need, high resources
D. High control need, low resources
✅ Answer: B. High control need, high resources
Q18. For products with long selling cycles, which intermediary is LEAST appropriate?
A. Manufacturer’s rep
B. Captive distributor
C. Direct sales force
D. Specialized VAR
✅ Answer: A. Manufacturer’s rep
Q19. Why do resellers prioritize “product packages” over specific brands?
A. To simplify taxes
B. To focus on product margins
C. To serve customer convenience and reduce transaction costs
D. To reduce inventory turnover
✅ Answer: C. To serve customer convenience and reduce transaction costs
Q20. Which distribution policy gives suppliers the highest reseller control?
A. Intensive
B. Selective
C. Exclusive
D. Indirect-only
✅ Answer: C. Exclusive
Q21. A high-tech supplier wants excellent applications engineering support. What channel is preferable?
A. Brokers
B. Agents
C. Direct sales + specialized support
D. Intensive retail
✅ Answer: C. Direct sales + specialized support
Q22. The term “cost-transfer role” of distributors means:
A. They increase supplier cost
B. They remove the need for customer service
C. They reduce total system cost via economies of scope
D. They replace all field sales functions
✅ Answer: C. They reduce total system cost via economies of scope
Q23. What increases a supplier's brand “pull” with end users?
A. Frequent inventory checks
B. User-level demand and preference
C. High credit terms for resellers
D. Mandatory selling quotas
✅ Answer: B. User-level demand and preference
Q24. If a product is a “line stopper,” the supplier should:
A. Rely on brokers
B. Increase direct control over selling and service
C. Outsource all functions
D. Avoid training customers
✅ Answer: B. Increase direct control over selling and service
Q25. Which best describes selective distribution?
A. Selling through every outlet possible
B. Selling through only one reseller
C. Selling through a limited number of qualified resellers
D. Eliminating all intermediaries
✅ Answer: C. Selling through a limited number of qualified resellers
Q26. A producer with limited resources but high control need is constrained because:
A. They can’t sell directly at all
B. They must perform as many key functions as possible within resource limits
C. They must choose only exclusive channels
D. They cannot use intermediaries at all
✅ Answer: B. They must perform as many key functions as possible within resource limits
Q27. What often motivates start-ups to use reps or distributors?
A. Ability to offer exclusive territories
B. Immediate access to established customer relationships
C. Lower product margins
D. Limited competition
✅ Answer: B. Immediate access to established customer relationships
Q28. As product technology matures, suppliers typically:
A. Increase their direct service footprint
B. Shift service functions to third-party providers
C. Eliminate distribution entirely
D. Reduce product variety
✅ Answer: B. Shift service functions to third-party providers
Q29. What is the primary role of captive distributors?
A. Represent multiple competing suppliers
B. Operate as internal business units balancing corporate and unit goals
C. Sell only to final consumers
D. Reduce corporate taxes
✅ Answer: B. Operate as internal business units balancing corporate and unit goals
Q30. In B2B markets, distributors carry thousands of SKUs, making channel management challenging because:
A. They avoid stocking high-margin items
B. Any one product struggles to get attention
C. They reject supplier promotions
D. Their inventory is limited
✅ Answer: B. Any one product struggles to get attention
Q31. Which is a direct consequence of adding more intermediaries?
A. Greater manufacturer pricing control
B. Lower channel complexity
C. More variability in service delivery
D. Reduced need for channel coordination
✅ Answer: C. More variability in service delivery
Q32. When does cost efficiency become the main determinant of channel design?
A. High control need + low financial resources
B. Low control need + high financial resources
C. High control need + high financial resources
D. Low control need + low financial resources
✅ Answer: B. Low control need + high financial resources
Q33. A supplier trying to increase reseller support should focus on:
A. Eliminating co-op advertising
B. Strengthening personal relationships with intermediaries
C. Reducing inventory visibility
D. Limiting field assistance
✅ Answer: B. Strengthening personal relationships with intermediaries
Q34. Which channel function becomes critical when users demand fast delivery?
A. Applications engineering
B. Field selling
C. Inventory carrying
D. Credit extension
✅ Answer: C. Inventory carrying
Q35. Why might a broker be used in agricultural commodities?
A. They take title to goods
B. They manage inventory well
C. They handle short-term supply/demand fluctuations efficiently
D. They specialize in technical selling
✅ Answer: C. They handle short-term supply/demand fluctuations efficiently
Q36. A supplier wanting maximum market coverage with minimal fixed costs should choose:
A. Direct-only channels
B. Exclusive distribution
C. Manufacturer’s reps or wholesalers
D. Captive distributors
✅ Answer: C. Manufacturer’s reps or wholesalers
Q37. What is a key threat when suppliers change reseller discount structures?
A. Increased market share
B. Loss of reseller support
C. Enhanced brand loyalty
D. Lower cost efficiency
✅ Answer: B. Loss of reseller support
Q38. A reseller with many sourcing options gains:
A. More dependence on a single supplier
B. Higher bargaining power
C. Lower negotiation leverage
D. Reduced inventory needs
✅ Answer: B. Higher bargaining power
Q39. A supplier’s price decision must consider:
A. Only end-user willingness to pay
B. Only competitor pricing
C. Impact on reseller margins and channel loyalty
D. Only distributor inventory levels
✅ Answer: C. Impact on reseller margins and channel loyalty
Q40. For startups, which channel function is hardest to perform internally?
A. Market sensing
B. Warehousing and logistics
C. R&D
D. Branding
✅ Answer: B. Warehousing and logistics
Q41. Multi-tier distribution is most common in:
A. High-value engineering goods
B. Specialized aerospace components
C. Mature product categories with standard specs
D. Luxury goods only
✅ Answer: C. Mature product categories with standard specs
Q42. The “package of products” logic used by resellers primarily supports:
A. Cross-selling efficiency
B. Supplier exclusivity
C. Inventory minimization
D. Eliminating end-user choice
✅ Answer: A. Cross-selling efficiency
Q43. Supplier–reseller “marketing partnership” is strongest when:
A. Margins are low
B. Trust and influence are high
C. Resellers carry competing brands
D. Product variety is minimal
✅ Answer: B. Trust and influence are high
Q44. What is a drawback of using agents?
A. High fixed selling cost
B. Low selling flexibility
C. Supplier must retain inventory and credit risk
D. Agents require full ownership control
✅ Answer: C. Supplier must retain inventory and credit risk
Q45. Which channel structure maximizes supplier control but increases internal cost?
A. Direct sales
B. Brokers
C. Multi-tier retail
D. Agent-based selling
✅ Answer: A. Direct sales
Q46. Intensive distribution risks:
A. Too much supplier control
B. Channel conflict due to overlapping coverage
C. Very high reseller margins
D. Low product availability
✅ Answer: B. Channel conflict due to overlapping coverage
Q47. As distributors grow larger with many product lines, suppliers must:
A. Reduce product features
B. Invest more in reseller attention and support
C. Avoid promotions
D. Remove credit terms
✅ Answer: B. Invest more in reseller attention and support
Q48. What is a major source of conflict in supplier–reseller implementation?
A. Aligned performance metrics
B. Differing goals and operating constraints
C. Shared revenue systems
D. Highly similar cost structures
✅ Answer: B. Differing goals and operating constraints
Q49. A producer evaluating a shift in channel functions should consider:
A. Only current reseller relationships
B. User familiarity and maturity of technology
C. HR policies
D. Competitor advertising
✅ Answer: B. User familiarity and maturity of technology
Q50. What is the ultimate purpose of channel management in sales?
A. Reduce selling cost
B. Improve field-level customer encounter experience
C. Increase factory utilization
D. Replace intermediaries entirely
✅ Answer: B. Improve field-level customer encounter experience
51. Which of the following is a primary objective of channel management?
A. Reducing product quality
B. Eliminating intermediaries
C. Ensuring efficient product flow
D. Reducing market demand
✅ Answer: C. Ensuring efficient product flow
52. A distribution channel is best defined as:
A. A pricing strategy used by wholesalers
B. The network used to move products from producer to consumer
C. A promotional tool to reach retailers
D. A technique to reduce product cost
✅ Answer: B. The network used to move products from producer to consumer
53. Which channel member typically provides storage, breaking bulk, and delivery?
A. Brokers
B. Wholesalers
C. Retailers
D. Agents
✅ Answer: B. Wholesalers
54. The conflict that occurs between different levels of the channel is called:
A. Parallel conflict
B. Vertical conflict
C. Multi-channel conflict
D. Structural conflict
✅ Answer: B. Vertical conflict
55. When two retailers compete to sell the same product, it is an example of:
A. Upstream conflict
B. Downstream conflict
C. Horizontal conflict
D. Cross-channel conflict
✅ Answer: C. Horizontal conflict
56. Which of the following is a benefit of indirect distribution channels?
A. Full control over customer experience
B. Faster product customization
C. Lower distribution cost
D. Increased production capacity
✅ Answer: C. Lower distribution cost
57. Direct distribution channels are more suitable for:
A. Low-value everyday goods
B. Perishable or high-value goods
C. Products requiring mass-market coverage
D. Products sold only in rural markets
✅ Answer: B. Perishable or high-value goods
58. A channel strategy that uses multiple intermediaries simultaneously is called:
A. Multi-level pricing
B. Hybrid or multichannel distribution
C. Parallel marketing
D. Joint distribution
✅ Answer: B. Hybrid or multichannel distribution
59. Which channel design offers the highest market reach?
A. Direct-to-consumer only
B. Intensive distribution
C. Supply-driven distribution
D. Selective distribution
✅ Answer: B. Intensive distribution
60. Selective distribution is most suitable for:
A. Luxury cars
B. FMCG products
C. Mass-market beverages
D. Basic commodities
✅ Answer: A. Luxury cars
61. Exclusive distribution aims to:
A. Maximize market share
B. Maintain product prestige
C. Reduce transportation cost
D. Increase price competition
✅ Answer: B. Maintain product prestige
62. Which channel member typically provides after-sales service?
A. Distributors
B. Brokers
C. Importers
D. Agents
✅ Answer: A. Distributors
63. A key reason for using intermediaries is:
A. To increase product manufacturing
B. To reduce channel communication
C. To overcome market inefficiencies
D. To eliminate customer contact
✅ Answer: C. To overcome market inefficiencies
64. Channel length increases when more ______ are added.
A. Producers
B. Intermediaries
C. Customers
D. Competitors
✅ Answer: B. Intermediaries
65. Channel depth refers to:
A. Number of outlets per territory
B. Intensity of distribution effort
C. Number of levels in the channel
D. Speed of delivery
✅ Answer: C. Number of levels in the channel
66. The most important factor in selecting channel members is:
A. Their promotional skills
B. Their geographic distance
C. Their financial strength and service capability
D. Their number of employees
✅ Answer: C. Their financial strength and service capability
67. A vertical marketing system aims to reduce:
A. Channel coordination
B. Market competition
C. Channel conflict
D. Innovation
✅ Answer: C. Channel conflict
68. Which system is characterized by one channel member owning the others?
A. Administered VMS
B. Corporate VMS
C. Contractual VMS
D. Cooperative VMS
✅ Answer: B. Corporate VMS
69. Franchise systems fall under:
A. Horizontal integration
B. Corporate VMS
C. Contractual VMS
D. Administered VMS
✅ Answer: C. Contractual VMS
70. In an administered VMS, coordination is achieved through:
A. Ownership
B. Contracts
C. Market power and leadership
D. Legal agreements
✅ Answer: C. Market power and leadership
71. A company like Walmart coordinating suppliers through its buying power is an example of:
A. Franchise system
B. Administered VMS
C. Corporate VMS
D. Independent channel
✅ Answer: B. Administered VMS
72. Dual distribution means:
A. One intermediary serving two producers
B. Selling through two channels simultaneously
C. Using distributors only
D. Using retailers only
✅ Answer: B. Selling through two channels simultaneously
73. Which tool helps evaluate channel performance?
A. Break-even analysis
B. Channel audit
C. Market expansion analysis
D. Customer segmentation
✅ Answer: B. Channel audit
74. The biggest risk of multi-channel distribution is:
A. Low sales volume
B. Higher product quality costs
C. Channel conflict
D. Lower customer reach
✅ Answer: C. Channel conflict
75. A retailer backward integrating into manufacturing is an example of:
A. Forward integration
B. Backward integration
C. Horizontal expansion
D. Lateral expansion
✅ Answer: B. Backward integration
76. Forward integration is when:
A. Manufacturers acquire competitors
B. Manufacturers take over retail operations
C. Retailers merge with wholesalers
D. Wholesalers merge with retailers
✅ Answer: B. Manufacturers take over retail operations
77. The key challenge in channel coordination is:
A. Maintaining product quality
B. Aligning interests of all channel members
C. Reducing logistics cost
D. Controlling brand communication
✅ Answer: B. Aligning interests of all channel members
78. Channel power is derived from:
A. Market size
B. Availability of technology
C. Ability to influence other members
D. Advertising budget
✅ Answer: C. Ability to influence other members
79. Which form of conflict is common with e-commerce channels?
A. Inter-corporate conflict
B. Horizontal conflict
C. Multi-channel conflict
D. Structural conflict
✅ Answer: C. Multi-channel conflict
80. Monitoring channel performance includes evaluating:
A. Employee dress code
B. Sales volume and service levels
C. Salary structure of retailers
D. Competitors’ HR policies
✅ Answer: B. Sales volume and service levels
81. The primary advantage of selective distribution is:
A. Maximum sales coverage
B. Stronger control over brand positioning
C. Higher price competition
D. Reduced marketing effort
✅ Answer: B. Stronger control over brand positioning
82. Which channel member typically performs the role of demand generation?
A. Retailers
B. Distributors
C. Sales agents
D. Brokers
✅ Answer: A. Retailers
83. A channel gap occurs when:
A. Products are priced too high
B. Customer needs are not fully met through existing channels
C. Too many intermediaries exist
D. Product quality declines
✅ Answer: B. Customer needs are not fully met through existing channels
84. Conflict caused by differing goals is called:
A. Cognitive conflict
B. Role conflict
C. Goal incompatibility
D. Structural conflict
✅ Answer: C. Goal incompatibility
85. Channel disintermediation refers to:
A. Increasing the number of intermediaries
B. Removing intermediaries and selling directly
C. Merging intermediaries
D. Outsourcing channel functions
✅ Answer: B. Removing intermediaries and selling directly
86. E-commerce has increased:
A. Channel length
B. Need for wholesalers
C. Disintermediation
D. Number of physical retailers
✅ Answer: C. Disintermediation
87. The main role of distributors in B2B markets is:
A. Advertising
B. Risk-taking and inventory management
C. Customer education only
D. Designing packaging
✅ Answer: B. Risk-taking and inventory management
88. Channel intensity is determined primarily by:
A. Geographic location
B. Product type and market strategy
C. Competitor prices
D. Sales force size
✅ Answer: B. Product type and market strategy
89. Which distribution strategy is most common for convenience goods?
A. Exclusive
B. Intensive
C. Selective
D. Localized
✅ Answer: B. Intensive
90. Which distribution channel provides the most control to producers?
A. Direct
B. Intensive
C. Hybrid
D. Wholesale-based
✅ Answer: A. Direct
91. Stockouts at the retail level usually indicate failure in:
A. Product manufacturing
B. Channel logistics management
C. Advertising campaigns
D. Pricing strategies
✅ Answer: B. Channel logistics management
92. A producer choosing only a limited number of dealers is practicing:
A. Channel concentration
B. Selective distribution
C. Standard distribution
D. Lateral distribution
✅ Answer: B. Selective distribution
93. The primary goal of channel partner incentives is:
A. Reduce product weight
B. Increase channel loyalty and performance
C. Reduce number of retailers
D. Improve manufacturing quality
✅ Answer: B. Increase channel loyalty and performance
94. A common KPI for channel partners is:
A. Employee turnover
B. Market share contribution
C. Rental cost
D. Raw material sourcing
✅ Answer: B. Market share contribution
95. Cross-channel integration is essential to ensure:
A. Higher cost of operations
B. Better customer experience
C. More intermediaries
D. Lower product quality
✅ Answer: B. Better customer experience
96. In channel management, “push strategy” focuses on:
A. Advertising to end consumers
B. Encouraging intermediaries to sell the product
C. Reducing product cost
D. Enhancing CSR activities
✅ Answer: B. Encouraging intermediaries to sell the product
97. Pull strategy is more effective when:
A. Brand equity is high
B. Channels are unstructured
C. Market demand is low
D. Intermediaries resist stocking
✅ Answer: A. Brand equity is high
98. Dual distribution often leads to:
A. Better coordination
B. Reduced conflict
C. Intra-brand competition
D. Lower brand awareness
✅ Answer: C. Intra-brand competition
99. The function of “breaking bulk” is performed mainly by:
A. Agents
B. Retailers
C. Distributors
D. Wholesalers
✅ Answer: D. Wholesalers
100. A primary challenge in managing modern retail channels is:
A. Lack of customer data
B. Managing omnichannel integration
C. High advertising cost
D. Limited product variety
✅ Answer: B. Managing omnichannel integration
101. Channel audits help:
A. Create brand logos
B. Improve channel performance
C. Reduce product SKUs
D. Design factory layout
✅ Answer: B. Improve channel performance
102. The key reason companies use agents is:
A. To hold inventory
B. To reduce selling costs
C. To manufacture products
D. To reduce product price
✅ Answer: B. To reduce selling costs
103. Which of the following is NOT a function of channel members?
A. Risk taking
B. Financing
C. Promotion
D. Product design
✅ Answer: D. Product design
104. Channel power is highest when a member controls:
A. Warehouse size
B. Customer access
C. Employee count
D. Raw materials
✅ Answer: B. Customer access
105. A retailer forward integrating into private labels is:
A. A manufacturer strategy
B. A channel conflict
C. A forward integration strategy
D. A disintermediation strategy
✅ Answer: C. A forward integration strategy
106. Channel margins are primarily used to:
A. Pay salaries
B. Reward intermediary functions
C. Reduce advertising costs
D. Increase manufacturing capacity
✅ Answer: B. Reward intermediary functions
107. Channel mapping helps identify:
A. Regional weather patterns
B. Flow of products and value
C. Consumer demographics
D. Competitor financial statements
✅ Answer: B. Flow of products and value
108. A wholesaler who sells directly to consumers is engaging in:
A. Vertical cooperation
B. Retail encroachment
C. Channel integration
D. Cooperative retailing
✅ Answer: B. Retail encroachment
109. Franchisees typically pay fees for:
A. Retail licenses
B. Brand name and operating system
C. Raw materials
D. Import duties
✅ Answer: B. Brand name and operating system
110. Selective channels often require:
A. Strict performance criteria
B. High advertising budgets
C. Multiple wholesalers
D. Low service levels
✅ Answer: A. Strict performance criteria
111. Channel duplication occurs when:
A. Two intermediaries perform overlapping functions
B. Retailers merge
C. Manufacturers reduce production
D. Competitors change strategy
✅ Answer: A. Two intermediaries perform overlapping functions
112. Inventory turnover is a key performance metric for:
A. Manufacturers
B. Intermediaries
C. Customers
D. Banks
✅ Answer: B. Intermediaries
113. Multichannel customers generally have:
A. Lower lifetime value
B. Higher lifetime value
C. No impact on profitability
D. Negative profitability
✅ Answer: B. Higher lifetime value
114. Cross-docking reduces:
A. Inventory holding cost
B. Sales volume
C. Retail density
D. Marketing effectiveness
✅ Answer: A. Inventory holding cost
115. The largest cause of distribution delay is often:
A. Product weaknesses
B. Poor logistics coordination
C. Low pricing
D. High advertising
✅ Answer: B. Poor logistics coordination
116. Channel partners prefer brands that offer:
A. High risk
B. Low margins
C. Strong support and training
D. Limited communication
✅ Answer: C. Strong support and training
117. The most common reason channel partners drop a product line is:
A. Too much advertising
B. Low profitability
C. Excessive demand
D. High customer satisfaction
✅ Answer: B. Low profitability
118. A company's channel strategy must always align with:
A. Employee size
B. Manufacturing cost
C. Overall marketing and business strategy
D. Supplier preferences
✅ Answer: C. Overall marketing and business strategy
119. Digital channels increase transparency by:
A. Reducing customer access
B. Limiting product visibility
C. Providing real-time tracking and pricing
D. Hiding company policies
✅ Answer: C. Providing real-time tracking and pricing
120. Omnichannel distribution aims to provide:
A. Different experiences across channels
B. One seamless customer experience
C. Higher inventory in all channels
D. More intermediaries
✅ Answer: B. One seamless customer experience
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