Question

Which of the following is true of marketing channels?

A) The cost of direct marketing channels is generally lower for a manufacturer than that of other channels.
B) In a direct marketing channel, intermediaries take a portion of the purchase price for their services.
C) Indirect channels incur the highest out-of-pocket marketing and sales expenses for manufacturers.
D) The net price derived from the use of indirect marketing channels is much higher than from direct channels.
E) Direct channels are able to capture most, if not all, of the end-user price.

Answer 1

Direct marketing channels allow the manufacturer to capture most, if not all, of the end-user price because there are no intermediaries that take a portion of the price. The correct option is E.

Step-by-step explanation:

The truth about marketing channels is that option E) Direct channels are able to capture most, if not all, of the end-user price is accurate. The term 'direct channels' refers to situations where the manufacturer sells their product directly to the consumer without the involvement of intermediaries like retailers or wholesalers.

By eliminating intermediaries, the manufacturer can capture the full retail price of the product minus any costs associated with marketing and selling the goods directly to consumers. This contrasts with indirect marketing channels, where each intermediary typically adds a markup to cover their costs and desired profit margins, reducing the net amount returned to the manufacturer.

Therefore, indirect channels usually result in a lower net price for the manufacturer as opposed to direct channels.