Channel selection: A 'cost of information' issue

Research in the area of marketing channels has, to date, dealt almost exclusively with either managerial issues or with theoretical modeling. These two streams of research have rarely overlapped, and little has been possible by way of standardized decision making. This research studies the issue of channel structure selection within a theoretical framework where the value of the intermediaries lie in their possession of information regarding the consumer market. A decision rule is developed, and several rules of thumb are offered for helping managers choose a channel structure. Finally, two industry examples are used to illustrate the application of the rules developed.