The role of a channel member is crucial in the distribution process. According to Alderson, the marketing channel takes care of the five gaps between production and manufacturing. First, the channel takes care of the time gap between the production activity and the purchase of products by the consumer at discreet intervals. Thus, the channel structure provides time utility of the product to the customer. Second, it deals with the space gap by providing place utility. The material is made available at the place of use. Third, the channel structure bridges the quantity gap. That is to say, the channel provides the required product to customers in relatively small quantities they need, although the manufacturer produces them in a large quantity. Fourth, the variety gap is filled by the channel structure. The manufacturer produces a limited variety of products, while the channel intermediary maintains product variety (from other manufacturers) to satisfy customer needs. Fifth, the channel members bridge the communication gap between the manufacturer and the consumer. The channel structure consists of various intermediaries who perform distribution services in anticipation of the returns on investment and effort they make. The degree of returns varies with the level of effort, variety of distribution tasks performed and the investments in the business.
Source: Sople V.V (2013), Logistics Management, Pearson Education India; Third edition.
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