Channel Management | Distribution Strategy, Intermediaries & Channel Design Quiz
⤷ Vertical Marketing System (VMS)
A VMS is an integrated distribution structure where manufacturers, wholesalers, and retailers work in a unified system. It reduces conflict, improves efficiency, and may operate through ownership (corporate VMS), contracts (contractual
VMS), or dominance (administered VMS). This integration ensures coordinated decision-making, better logistics, and consistent customer experience.
⤷ Channel Conflict
Channel conflict arises when members of a distribution network disagree on goals, pricing, roles, or territories. It can be vertical (between levels), horizontal (same level), or multi-channel (online vs offline). Effective governance,
clear policies, incentives, and communication are essential to reducing conflict.
⤷ Omnichannel Distribution
Omnichannel distribution integrates physical stores, online portals, mobile apps, and partner networks into one unified system. It ensures consistent pricing, service, and experience across touchpoints. The strategy is key in modern
retail to improve convenience, personalization, and customer satisfaction.
⤷ Explain selective, exclusive, and intensive distribution with examples.
- Selective distribution: Limited number of outlets; used for electronics or semi-premium goods.
- Exclusive distribution: One exclusive dealer per territory; used for luxury cars, designer brands.
- Intensive distribution: Maximum possible outlets; used for FMCG products like snacks and beverages.
⤷ Describe the roles of intermediaries in the distribution channel.
Intermediaries perform essential functions such as information sharing, financing, promotion, negotiation, risk-taking, breaking bulk, transportation, and after-sales support. They reduce inefficiencies by bridging gaps between
producers and consumers.
⤷ Disintermediation and Reintermediation
Disintermediation removes intermediaries, often through direct digital channels. Reintermediation occurs when new intermediaries emerge (e.g., Amazon marketplace). Both reshape channel strategy and influence costs, reach, and customer
relationships.
⤷ What factors influence channel design?
Channel design is influenced by product characteristics (perishability, value), market factors (geography, customer type), company capabilities (financial strength, logistics), competitors’ channels, and regulatory constraints.
⤷ Channel Power
Channel power refers to the ability of one channel member to influence others through market leadership, brand strength, technology, or customer access. It affects negotiation outcomes, pricing, and overall distribution coordination.
⤷ What is channel intensity and how is it decided?
Channel intensity refers to the number of intermediaries in a given market. It is decided based on product type, customer expectations, market coverage goals, brand positioning, and strategic considerations.
⤷ Push vs. Pull Strategy
- Push Strategy: Targets intermediaries to stock and promote the product.
-
Pull Strategy: Targets consumers to create demand, encouraging intermediaries to stock products.
Both must be balanced for optimal channel performance.
⤷ True / False Questions (Channel Management)
1. Channel conflict only occurs between members at different levels.
❌ False — it may be horizontal or vertical.
2. Exclusive distribution is used mainly for premium or luxury products.
✔ True
3. Wholesalers typically take ownership of goods and bear inventory risk.
✔ True
4. Direct channels offer producers maximum control.
✔ True
5. Intensive distribution is designed to restrict product availability.
❌ False — it maximizes availability.
6. A corporate VMS is coordinated through contracts.
❌ False — it is coordinated through ownership.
7. Multi-channel distribution can increase the risk of conflict.
✔ True
8. Disintermediation adds more intermediaries to the supply chain.
❌ False — it removes intermediaries.
9. Channel performance measurement includes KPIs such as inventory turnover.
✔ True
10. Selective distribution improves brand control and partner quality.
✔ True
11. Pull strategy targets intermediaries more than customers.
❌ False — it focuses on end consumers.
12. Channel mapping helps visualize the flow of products and value.
✔ True
13. Retailers perform the breaking bulk function.
❌ False — wholesalers mainly do this.
14. Channel coordination reduces inefficiencies and improves service.
✔ True
15. Franchise systems are a type of contractual VMS.
✔ True
channel management, distribution channels, marketing channels, vertical marketing systems, VMS, channel conflict, horizontal conflict, multichannel strategy, omnichannel distribution, selective distribution, exclusive distribution, intensive distribution, wholesalers, retailers, distributors, agents, brokers, supply chain coordination, channel power, channel performance, channel audit, channel strategy, distribution logistics, breaking bulk, inventory management, disintermediation, forward integration, backward integration, hybrid channels, B2B distribution, retail encroachment, franchise distribution, channel mapping, distribution efficiency, market coverage strategy, channel partner incentives, channel KPIs, channel alignment, channel governance, push strategy, pull strategy, customer experience channels, omnichannel customer journey, digital channels, cross-channel integration
