This introductory chapter is intended to “set the table” so to speak for the rest of the textbook. Marketing is defined as an academic discipline. The critical importance is emphasized of market segmentation and target market selection to the firm. Importantly, a new model of marketing strategy is proposed that attempts to tie everything together. As defined, marketing is critical for every firm, including distributors and retailers. Channels of distribution are described. A discussion is given on how channels help connect the firm to targeted end-customers. In addition, how channels of distribution relate to brand equity and the pricing of goods is stressed. Finally, the critical importance of the pull and push strategy is highlighted, pertaining to how this plan improves the functioning of every marketing channel of the firm.

The importance is stressed of understanding the definition of channel contracts and associated common terms. An argument is made that channel contracts are necessary in every inter-firm channel relationship. The steps taken to formulate channel contracts are presented, followed by a discussion of why alteration of contracts is often required. It is acknowledged why serious contract violations must be dealt with swiftly and effectively. The implications of major laws that apply to channel conduct are evaluated.

What conflict means as a construct is discussed. Acknowledgment is made of the main stages in the conflict process, within and between channel organizations. An analysis is undertaken of the major causes of conflict, within both direct channels and indirect channels, and how they can be reduced in magnitude. Consideration is given to how contract enforcement efforts and conflict are interconnected. It is emphasized that conflict can have both functional and dysfunctional effects, within and between organizations. An evaluation is made of how conflicts can be effectively resolved.

The major purpose of this chapter is to reduce the confusion that exists in the marketing discipline as to the meaning of power. Thus, channel power is first defined as a construct. The value of the supplier achieving major channel coordination objectives through power and its appropriate use cannot be overestimated. An explanation is given as to why sales manager power is critical in direct channels. Then, how firm power can be built in inter-firm relationships with distributors and retailers is explained. An evaluation is made of the strengths and weaknesses of channel coordinators applying supplier power through alternative communication strategies with intermediaries. Importantly, the factors leading to firm control of company salespeople and independent channel members are recognized. Finally, an analysis is made of how suppliers can effectively deal with powerful intermediaries.

A summary of the textbook is given. In order to do so with some ingenuity, ten commandments of channel organization and ten commandments of channel coordination are proposed, resting on major principles developed throughout the chapters. Important channel principles not covered in the commandments are then stated and reviewed. This discussion is intended to help people comprehend what the textbook was designed to accomplish. Hopefully, the textbook’s treatment of channel principles will be of value to everyone, aiding their knowledge of how effective channel organization and coordination contribute to company welfare.

This chapter attempts to distinguish the major types of distribution channels firms utilize, including distributors and retailers. Key characteristics are identified of direct channels. Then, indirect channels are detailed, including the major challenges faced in operating them. What determines whether a direct or indirect channel is chosen and implemented by the firm is explained in a clear fashion. However, that said, and in most cases, both direct and indirect channels are utilized by firms in multiple-channel distribution arrangements.

Initially, an attempt is made to provide a precise definition of channel functions, which are so vital to the firm. The tough challenge of gaining acceptable performance of work activities in all the firm’s channels is explained. Then, an analysis is presented of how new technologies can affect the processing and delivery of customer orders. Acknowledgment is made of the impact of brand positioning and value propositions on channel functions. It follows that superior performance of critical channel functions is vital to delighting targeted end-customers and a thorough explanation is given. To conclude, a discussion is provided of the role of supply chain management in the firm and the main steps necessary to be taken in the order management cycle.

Perhaps the major deciding factor in how well firms perform is their understanding of the buying behavior of targeted end-customers and how they utilize this knowledge in shaping the product, price, promotion, and, yes, place or “channels of distribution” strategic variables. In the current business environment, merely satisfying targeted end-customers is not enough. Instead, the firm must “delight” them. Clearly, a major change in targeted end-customer behavior necessitates, no doubt, a monumental change in the organization and coordination of the firm’s marketing channels. How user-generated content and other online information are influencing end-customer search is focused upon. Doing a thorough job of market segmentation is emphasized, based on the identification of relevant demographic, geo-demographic, and activity, interest, and opinion variables. Finally, the top management of the firm and all marketing and sales managers must grasp the five main stages of the buying process, as well as their many implications.

An explanation is given of what channel coordination entails and why it is so important, both internally and externally to the firm. Key coordination objectives are discussed. The importance of pull and push strategy connections to successful channel coordination efforts is stressed. Sufficient channel control is only achieved in both direct channels and indirect channels through effective coordination efforts. How power is built and applied within both direct and indirect channels is elaborated upon. Finally, an explanation is given of how manifest conflict and motivation can impact both channel functioning and subsequent end-customer behavior.

The meaning of motivation is discussed. Focus is given to what should be the most important desired goal in any supplier’s channel systems, specifically, delighting targeted end-customers. An evaluation is then made of how goal-directed behaviors in the firm’s channels can contribute. Valued outcomes that can result from the performance of the right goal-directed behaviors are discussed at both the employee and channel member levels. Why recruitment, hiring, and selection of employees are so critical to channel motivation is emphasized. Next, an examination is made of how effective monitoring and performance appraisal can influence channel motivation. Finally, the major theories of motivation are summarized.