One important reason channel members are included between producers and users is to increase contact efficiency. How do channel members increase contact efficiency? Use the following two scenarios to illustrate your answer: (1) Assume there are 2,000 business students who need to buy textbooks from eight textbook publishers. How many transactions must take place? (2) Assume the first scenario, but now one campus bookstore is acting as an intermediary. Now how many transactions must take place?
What will be an ideal response?
Channels make distribution simpler and more efficient by reducing the number of transactions required to get products from manufacturers to consumers. In the provided example, the first scenario requires 16,000 transactions (2,000 students X 8 publishers). In the second scenario, only 2,008 transactions are necessary (1 bookstore X 8 publishers + 2,000 students X 1 bookstore). Clearly, a significant reduction in transactions takes place if intermediaries are added to the system.
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