Major Household Appliances: A Lesson in Distribution

by Jerome Kernan



A significant element in marketing costs is the middleman's margin. This paper suggests that the behavior of margins over time affords a clue to potential friction in marketing channels. It is therefore worth some effort to monitor margins in order that efficiency in distribution may be enhanced. For several reasons, it is difficult to secure operationally useful margin data. This article presents one-way, imperfect, but usable, of dealing with this difficulty. The major household appliance industry is used to illustrate how structural change can cause friction among middlemen. Other industries might draw a lesson from this example. The institutional structure of marketing has been described as adaptive. This paper has suggested a convenient approach to the difficult, yet important, problem of measuring middlemen's margins. The approach outlined is imperfect, to be sure. There are certainly operational limitations on the technique proposed, however. It is an indirect, macro, measure of a marketing phenomenon that in the last analysis should be evaluated on a micro level.

California Management Review

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