Changing Channel Organization

Changes in technology and the unstable growth of online and direct marketing are having a profound impact on the nature and design of marketing channels. One major trend is toward disintermediation-a   big term with  a clear message and significant consequences. Disintermediation means that more and more, service and product producers are bypassing intermediaries and directly going to last buyers, or that drastically new types of channel intermediaries are emerging to displace traditional ones.

Therefore, in many of the industries, traditional intermediaries are reducing by the wayside. Disintermediation presents opportunities and problems for producers and intermediaries both. To ignore being swept aside, traditional intermediaries has to find new ways to add value in the supply chain. To remain competitive, and service and product producers must develop new channel opportunities, like Internet and other direct channels. Though, developing these new channels frequently brings them into direct competition with their established channels, resulting in conflict. To simplify this problem, companies frequently look for ways to make going direct a plus for the company and its channel partners both:

Though, this compromise system decrease conflicts, it also creates inefficiencies.