Marketing channel is consisted of inter-reliant entities, providing the end user with the service output of delivery time, market decentralization, product variety, and product information. These service outputs are achieved through the performance of the marketing functions or flows. The decisions on the amount of output to be delivered by channel members are directly influenced by the resource base and capabilities of channel members to perform various marketing functions and by the kind of service outputs by end users. The result of the interaction between channel members resources and end users requirements is a channel structure or arrangement that is capable of satisfying the needs of both channel members and end users. Environments, around which all marketing activities are happening in broad sense, always affect all these interactions. We are witnessing some important changes of environment in Korea these days. They are newly introduced distribution channels, complete opening of distribution industry, lifting ban on import from Japan, and changing life style of consumers.
This thesis is trying to come up with proposal on how for Korean consumer electronics manufacturers to improve and change the current marketing channels under the prevailing environment in Korea. Factors considered here is which channel provides what levels of service output to end user, and who can provide the same services in better way. 4 different service outputs mentioned previously are in our discussion, and transaction cost theory is the basis of selecting who is better, or what system is better, in the point of efficiency of internal supply chain, or commercial channel.
Conclusion is two points. First, vertically belonged dealers to manufacturers should improve their product variety by changing selling one branded product to multi branded product. Second, condition between vertically belonged dealers to manufacturers and manufacturer should be reshaped. Considering Korea specific management environment and style, those dealers and manufacturer-owned shops are to be under administered vertical marketing system. This system would make manufacturer and dealers more flexible to ever changing environment, thus making whole channel more flexible and efficient. When this kind of marketing channel is set to run in the market, Korean consumer electronics manufacturers would be in a more competitive position to compete with Japanese branded products.
