Channel Structure
Channel structure may be viewed as a function of product life cycle, logistics systems, effective communication networks, product characteristics, or firm. However, the most detailed theory of channel structure was developed by Louis P. Bucklin, who staled that the purpose of the channel is to provide consumer's with the desired combination of its outputs (i.e., lot size, delivery time, and market decentralization) at minimal cost. Consumers determine channel structure by purchasing combinations of service outputs. The best channel forms when no other group of institutions generates more profits or more consumer satisfaction per dollar of product cost. Bucklin concluded that functions will be shifted from one channel member to another in order to achieve the most efficient and effective channel structure.
The factors that might influence channel structure include:
1. Outsourcing.
2. Posponement and speculation.
3. Speed.
4. Technological, cultural, physical, social, and political factors.
5. Physical factors - geography, size of market area, location of production centers, and concentration of population.
6. Local, state, and federal laws.
7. Social and behavioral variables.