Channel Design and Route-to-Market Decisions

Introduction

A brand reaches customers through a route-to-market system: the set of organizations, activities, technologies, and relationships used to move an offering from producer to final user. Channel decisions are therefore not merely logistical. They shape market coverage, customer experience, availability, price realization, brand meaning, data access, and the economics of growth.

A premium skincare brand distributed through selected department stores communicates scarcity and expertise. The same brand sold through every discount marketplace may achieve broad availability but weaken its prestige positioning. Conversely, an everyday household product that is difficult to find will lose sales even if its advertising is effective. Channel design must therefore connect marketing strategy with operational and financial realities.

A channel can be direct, such as a brand-owned website; indirect, such as a wholesaler supplying retailers; or hybrid, combining direct, partner, marketplace, social-commerce, and service channels. The central managerial task is to create an appropriate balance among reach, control, cost, flexibility, speed, capability, and brand fit.

Learning Objectives

By the end of this chapter, students should be able to:

1. Explain the role and structure of marketing channels and route-to-market systems.
2. Distinguish intensive, selective, and exclusive distribution.
3. Select and evaluate wholesalers, distributors, agents, franchisees, retailers, marketplaces, and direct-to-consumer routes.
4. Analyse channel length, reach, control, cost, flexibility, and brand fit.
5. Identify and manage channel conflict, governance, legal, ethical, and data-related risks.
6. Recommend a channel design using qualitative and quantitative evidence.

1. The Nature of Marketing Channels

A marketing channel is a network of independent or integrated organizations that perform activities required to make a product or service available for use or consumption. These activities include transportation, warehousing, inventory holding, financing, selling, promotion, installation, service, returns, information exchange, and risk bearing.

A simple physical flow may be expressed as:

Manufacturer → Distributor/Wholesaler → Retailer/Marketplace → Customer
      ↑                 ↑                    ↑                  ↓
  Production        Stocking             Selling          Feedback/Payment

In practice, products, ownership, payments, information, and promotional messages may move in different directions. A retailer may own inventory, a logistics provider may only transport it, and a marketplace may facilitate transactions without taking ownership. This distinction is important because channel members differ in risk, control, legal responsibility, and margin requirements.

Direct and indirect channels

In a direct-to-consumer route, the producer sells through its own stores, website, mobile application, sales force, or social-commerce account. Direct channels generally provide greater control over presentation, price communication, customer data, and service. They also require the producer to invest in traffic generation, fulfilment, customer service, payment systems, returns, and demand forecasting.

An indirect channel uses one or more intermediaries. Intermediaries can reduce transaction complexity by aggregating products, customers, geography, credit, expertise, and logistics. A producer may therefore reach many small retailers more efficiently through a distributor than by servicing each outlet directly.

Channel functions

The principal channel functions are:

• Transactional functions: buying, selling, negotiation, and risk taking.
• Logistical functions: sorting, storing, transporting, consolidating, and breaking bulk.
• Facilitating functions: financing, market information, promotion, installation, service, and returns.

Intermediaries do not eliminate these functions; they redistribute them. If a producer removes an intermediary, it must decide which functions it will perform, automate, outsource, or discontinue. A lower number of intermediaries does not automatically mean lower total cost.

2. Channel Structure and Channel Length

Channel length refers to the number of intermediary levels between producer and final customer. A zero-level channel is direct. A one-level channel may involve a retailer; a two-level channel may involve a wholesaler and retailer. Agents and brokers may facilitate exchange without taking title, so they should be distinguished from inventory-owning intermediaries.

Long channels may offer extensive geographic coverage, local selling capability, credit provision, and lower administrative complexity for the producer. Their disadvantages can include lower margins, slower information flows, reduced control over presentation, and greater risk of inconsistent pricing or service.

Short channels can improve control, speed, data access, and customer relationships. However, they may demand substantial investment in fulfilment, account management, sales infrastructure, and market development.

Channel length should be determined by the functions required, not by a simplistic preference for “cutting out the middleman.” A firm should ask:

1. Which activities must be performed?
2. Which party can perform each activity most effectively?
3. Who bears the associated cost and risk?
4. What level of customer access and control is strategically necessary?

3. Distribution Intensity

Distribution intensity describes how widely a product is made available within a market or territory.

Intensive distribution

Intensive distribution seeks availability through as many suitable outlets as possible. It is common for convenience goods, packaged foods, batteries, beverages, and routine personal-care products. The objective is high physical availability and low customer search effort.

Strengths include broad reach, high purchase convenience, and reduced dependence on individual outlets. Risks include weaker control, price competition, inconsistent merchandising, and possible brand dilution. Intensive coverage also requires strong replenishment and inventory visibility.

Selective distribution

Selective distribution uses a limited number of carefully chosen intermediaries. It is appropriate where customers compare alternatives, require advice, or expect a particular service level. Consumer electronics, furniture, professional equipment, and many fashion brands use selective systems.

Selection criteria may include location, sales capability, technical competence, service quality, financial stability, digital capability, and willingness to follow brand standards. Selective distribution can balance reach and control, but it requires disciplined partner evaluation and performance management.

Exclusive distribution

Exclusive distribution grants one or a very small number of intermediaries the right to sell in a defined territory, channel, or customer segment. It is associated with luxury goods, specialist products, high-involvement services, and some franchise systems.

Exclusivity can support premium positioning, partner commitment, specialist service, and reduced intra-brand competition. It can also constrain reach, create dependence on a partner, and produce competition-law concerns if exclusivity unfairly restricts market access. Exclusivity should therefore be geographically and temporally justified, documented, and reviewed.

The appropriate intensity may differ by product line, country, customer segment, and lifecycle stage. A brand may use exclusive boutiques for flagship products, selective retailers for core products, and intensive online availability for accessories.

4. Route-to-Market Options

Wholesalers

Wholesalers buy, consolidate, store, and resell products, often serving retailers or business users. They are valuable when a producer needs broad coverage across many small accounts. Selection criteria include geographic reach, inventory capability, category expertise, creditworthiness, sales force quality, information systems, and service standards.

The producer should clarify whether the wholesaler is expected to create demand or merely fulfil orders. A wholesaler with extensive warehouses but weak selling capability may not support a market-development strategy.

Distributors

Distributors commonly perform broader commercial and logistical functions than wholesalers. Depending on the industry, they may provide local sales, technical support, installation, regulatory assistance, spare parts, and after-sales service. In industrial and international markets, a capable distributor can reduce market-entry risk.

Contracts should define territory, customer ownership, inventory obligations, minimum performance, service levels, forecasting, reporting, returns, intellectual property, and termination rights. The producer must avoid appointing a distributor whose portfolio contains direct competitors with incompatible priorities unless the arrangement is deliberately designed and monitored.

Agents and brokers

Agents and brokers facilitate transactions, usually earning commission rather than purchasing inventory. They can provide relationships and selling expertise with lower inventory risk. However, the producer may retain responsibility for fulfilment, credit, product claims, and customer service. Agency agreements should specify authority, commission calculation, customer ownership, compliance duties, and post-termination rights.

Franchisees

Franchising combines a standardized brand and operating system with locally owned and operated outlets. The franchisor typically supplies brand identity, training, processes, technology, product specifications, and continuing support. The franchisee contributes capital, local management, and operational execution.

A franchise system requires more than a logo and a contract. It depends on a replicable value proposition, enforceable standards, training, audits, local adaptation rules, and fair economics. Excessive standardization may make the format culturally unsuitable; excessive flexibility may create an inconsistent brand experience.

Retailers

Retailers provide customer access, assortment, merchandising, service, and often credit. Evaluation should consider not only sales volume but also customer fit, store environment, digital integration, data sharing, promotional behaviour, payment performance, and treatment of competing brands.

A retailer with high volume may still be a poor strategic partner if it routinely discounts below agreed positioning, displays the product poorly, or withholds customer insight. Retailer scorecards should include both financial and brand measures.

Marketplaces

Digital marketplaces aggregate sellers and customers and may provide search, payment, fulfilment, reviews, advertising, and dispute resolution. They can accelerate reach and demand discovery, particularly for smaller brands. However, the brand may have limited control over search ranking, competitor adjacency, seller authenticity, customer data, commissions, reviews, and platform policies.

A marketplace strategy should address authorized sellers, counterfeit control, product content, minimum advertised price policies where lawful, fulfilment standards, review management, inventory synchronization, and customer-service responsibility. Marketplace sales should not be treated as automatically equivalent to direct customer relationships.

Direct-to-consumer channels

DTC routes include brand websites, owned stores, subscriptions, mobile applications, social commerce, and direct sales teams. They can improve first-party data, experimentation, personalization, and control over the customer journey. They also expose the firm to high customer-acquisition costs, fulfilment complexity, returns, fraud, and service obligations.

DTC is not necessarily cheaper than indirect distribution. The correct comparison is total channel economics, including technology, marketing, fulfilment, payment fees, support, returns, and working capital.

5. A Framework for Channel Design

Channel design should begin with customer and brand requirements rather than available intermediaries. A practical sequence is as follows.

Step 1: Define the target customer and buying situation

Identify where, when, how, and why customers buy. Consider shopping frequency, urgency, need for demonstration, desired assortment, willingness to travel, digital behaviour, and service expectations. Business customers may prioritize technical support and reliable delivery, while convenience shoppers may prioritize immediate availability.

Step 2: Translate brand positioning into channel requirements

A brand promise must be operationally supported. A premium promise may require controlled environments, trained advisers, authentic product presentation, and reliable after-sales service. A value promise may require efficient replenishment, low operating cost, and broad access.

Step 3: Specify channel functions and service outputs

Service outputs include lot size, waiting time, spatial convenience, product variety, information, installation, and returns. The desired service level determines the channel capabilities required.

Step 4: Generate alternative channel systems

Alternatives may combine DTC, distributors, specialty retailers, general retailers, marketplaces, social commerce, and institutional sales. A hybrid system should specify customer and product allocation rules to reduce destructive cannibalization.

Step 5: Evaluate alternatives

The main criteria are economic, control, adaptability, and brand fit. These dimensions can be supplemented by risk, data access, sustainability, regulatory compliance, and resilience.

A useful weighted scoring model is:

where S_j is the total score of channel alternative j, w_i is the weight assigned to criterion i, and r_ij is the rating of alternative j on criterion i. Weights should sum to 1, and ratings must use a consistent scale, such as 1 to 5. The model assumes criteria are sufficiently defined and that weighted addition is a reasonable approximation; it should support, not replace, managerial judgment.

For example, suppose three alternatives are evaluated using reach (0.30), control (0.25), cost efficiency (0.20), flexibility (0.10), and brand fit (0.15). If a selective partner system receives ratings 4, 4, 4, 3, and 5, its score is:

S = (0.30×4) + (0.25×4) + (0.20×4) + (0.10×3) + (0.15×5) = 4.05

The result is a comparative decision aid, not a forecast of sales. Sensitivity analysis should test whether the choice changes when weights or ratings change.

Step 6: Design governance and measurement

The firm should establish contracts, standards, incentives, data-sharing rules, dispute procedures, audit rights, and exit plans. It should also define measures before appointing partners.

6. Channel Economics

Channel economics should be evaluated using total contribution rather than gross sales alone. A simplified contribution equation is:

where C is contribution for the period, R is channel revenue, V is variable channel cost, and F is fixed channel cost. Variable costs may include manufacturing, commissions, marketplace fees, fulfilment, payment processing, returns, and promotional allowances. Fixed costs may include websites, warehouses, sales teams, technology, and stores. The equation is useful for comparing alternatives when cost classifications are consistent; it does not by itself capture strategic value, risk, or long-term customer equity.

For a unit-level comparison, contribution per unit can be written as:

where c_u is unit contribution, p_n is net revenue per unit after discounts and channel deductions, and v_u is variable cost per unit. If fixed channel cost is relevant, break-even volume is:

where Q_BE is break-even units, F is fixed cost, and c_u must be positive and measured in the same currency per unit. This formula assumes a constant unit contribution and stable fixed costs within the relevant range.

Worked example

A brand compares a marketplace and its own website for one product. The marketplace net revenue is $31 per unit and variable fulfilment and service cost is $18, giving unit contribution of $13. The website generates $36 net revenue and variable cost of $20, giving unit contribution of $16. However, the website requires $48,000 of fixed annual technology and service cost, while the marketplace requires $12,000 in fixed integration cost.

At 6,000 units:

• Marketplace contribution = (6,000 × $13) − $12,000 = $66,000.
• Website contribution = (6,000 × $16) − $48,000 = $48,000.

At this volume, the marketplace produces greater short-term contribution. The website becomes financially superior when:

13Q − 12,000 = 16Q − 48,000

Thus, Q = 9,000 units. Above 9,000 units, the website has the higher contribution under the stated assumptions. This calculation excludes differences in customer lifetime value, data value, acquisition cost, and strategic control; those should be analysed separately.

7. Channel Governance and Performance Management

A channel relationship is governed through a combination of formal contracts, economic incentives, social relationships, information systems, and monitoring. Important contractual provisions include territory, customer segments, exclusivity, sales targets, inventory ownership, payment terms, brand-use rights, data protection, service levels, product authenticity, returns, dispute resolution, audit rights, and termination.

Performance dashboards should combine outcome, process, and relationship measures. Examples include:

Sell-in is the producer’s sale to an intermediary; sell-through is the intermediary’s sale to the final customer. Excessive focus on sell-in can create channel inventory that later requires discounting. Sustainable channel management emphasizes sell-through and customer value.

8. Multichannel and Omnichannel Challenges

Multichannel distribution uses several channels. Omnichannel management seeks a coordinated customer experience across those channels. A customer may discover a product on social media, compare it on a marketplace, purchase through a retailer, and seek service through the brand website. Channel design must therefore address identity, pricing, inventory visibility, fulfilment, and service continuity across touchpoints.

Common sources of conflict include:

• price differences between DTC and retailers;
• the brand’s website competing for customers traditionally served by partners;
• marketplace sellers undercutting authorized retailers;
• unequal promotional support;
• disputes over leads, territories, and customer ownership;
• inconsistent product information or service;
• product launches that bypass important partners.

Conflict is not always harmful. Constructive conflict can reveal inefficient processes or unmet customer needs. Managers should distinguish productive competition from destructive behaviour that damages trust or brand value.

Possible responses include differentiated assortments, channel-specific bundles, transparent pricing principles, lead-registration systems, shared promotions, common product information, inventory coordination, and clear rules for service and returns. A firm should avoid creating artificial differences that confuse customers or violate consumer-protection requirements.

9. Technology, Data, and Artificial Intelligence

Digital platforms enable real-time inventory visibility, electronic ordering, customer relationship management, partner portals, and automated replenishment. Data can improve assortment, forecasting, promotion, and partner evaluation. However, data quality and governance are as important as analytical sophistication.

Artificial intelligence may support demand forecasting, delivery planning, product recommendations, assortment selection, fraud detection, and customer-service routing. Its use should be controlled by human review, especially where recommendations affect partner access, credit, pricing, or customer treatment. Managers should examine data bias, explainability, privacy, cybersecurity, intellectual property, and accountability.

A forecast generated by an algorithm does not remove uncertainty. Exceptional events, new products, promotions, stockouts, and structural market changes can make historical data unreliable. AI should therefore augment channel expertise rather than replace market judgment.

10. Legal, Ethical, and Sustainability Considerations

Channel arrangements must comply with competition law, franchise regulation, agency rules, consumer-protection requirements, data-protection law, product-safety obligations, and sector-specific regulation. Exclusivity, resale-price practices, territorial restrictions, platform conduct, and information exchange can attract legal scrutiny. The precise rules vary by jurisdiction, so legal advice is necessary before implementation.

Ethical channel management includes truthful product claims, fair treatment of small partners, transparent incentives, responsible use of customer data, protection against counterfeit goods, and accessible complaint resolution. A producer should not shift unreasonable risks to intermediaries with limited bargaining power while retaining the benefits of the relationship.

Sustainability considerations include transport emissions, packaging, returns, reverse logistics, warehouse energy use, delivery density, and product waste. A channel that appears efficient financially may create high environmental or social costs. Firms should assess total impact rather than optimize only one cost line.

11. Illustrative Case: TerraSip Reusable Bottles

Background

TerraSip is a fictional mid-sized brand selling durable reusable bottles to environmentally conscious urban consumers. It has strong social-media awareness but limited physical availability. Its current route consists of a brand website, two national outdoor retailers, and a large online marketplace.

Problem

The brand faces three tensions. First, marketplace discounting is weakening its premium image. Second, outdoor retailers want exclusive colours and promotional support. Third, the DTC website produces valuable customer data but has a high cost of customer acquisition. Management must decide whether to pursue intensive, selective, or exclusive distribution.

Analysis

TerraSip’s target customers value design, sustainability evidence, convenience, and reliable product information. The product does not require technical installation, but customers benefit from tactile demonstration and comparison of sizes. This suggests selective physical distribution combined with controlled digital availability rather than unrestricted intensive distribution.

The marketplace provides reach and discovery, but unauthorized sellers create authenticity and price risks. Outdoor retailers provide credible context and demonstration, but excessive exclusivity would limit access. The DTC site is strategically important for product education, subscriptions for accessories, warranty registration, and first-party data, although it should not be evaluated solely on immediate transaction margin.

Approach and solution

TerraSip adopts a hybrid system:

1. The DTC website remains the primary source for the full assortment, personalization, warranty registration, and educational content.
2. Selected outdoor and design retailers receive core products and exclusive seasonal colours, subject to merchandising and service standards.
3. The marketplace is retained only through an authorized seller programme with controlled content, authentication, minimum service standards, and inventory integration.
4. Wholesale expansion is limited to distributors with credible sustainability and outdoor-market capabilities.
5. A channel scorecard tracks sell-through, stock availability, discount frequency, return rates, customer reviews, data sharing, and brand-execution compliance.
6. Product bundles and launch timing are coordinated to reduce direct price comparisons and partner conflict.

Outcome

In the first year, TerraSip does not maximize outlet count. Instead, it improves availability in priority cities, reduces unauthorized listings, and increases the proportion of sales linked to registered customers. Retail partners receive clearer support, while the DTC site becomes a relationship and service platform rather than merely another store.

Learning points

The case illustrates that route-to-market design is a strategic portfolio decision. DTC, retail, and marketplace channels can perform different jobs. Channel quality, governance, and customer fit may be more valuable than maximum numerical reach. A hybrid model succeeds only when responsibilities, data, assortment, pricing principles, and service standards are coordinated.

12. Best-Practice Decision Checklist

Before implementing a channel design, managers should be able to answer the following:

• Does the channel make the brand promise credible at the point of purchase?
• Does it reach priority customers at an acceptable level of convenience?
• Are all required channel functions assigned clearly?
• Is the total economic contribution understood, including indirect costs?
• Are partner capabilities, incentives, and conflicts assessed?
• Is the required level of control realistic and affordable?
• Can the system adapt to market, technology, and regulatory change?
• Are data, privacy, authenticity, and cybersecurity governed?
• Are performance metrics based on sell-through and customer value, not only sell-in?
• Is there a fair process for resolving conflict and exiting poor relationships?
• Does the design meet legal, ethical, and sustainability expectations?

Chapter Summary

Channel design determines how a brand becomes available and how its value proposition is experienced. Direct channels provide control and data but require investment in demand generation, fulfilment, and service. Indirect channels provide reach, specialization, and transaction efficiency but may reduce control and margin. Channel length should follow required functions and capabilities rather than a simplistic preference for fewer intermediaries.

Intensive distribution maximizes availability, selective distribution balances reach and control, and exclusive distribution emphasizes specialization, prestige, or partner commitment. Wholesalers, distributors, agents, franchisees, retailers, marketplaces, and DTC routes perform different roles and should be selected according to customer needs, brand fit, economics, capability, and risk.

A sound channel design process defines customer requirements, translates positioning into channel standards, maps functions, generates alternatives, evaluates economics and strategic fit, and establishes governance. Weighted scoring and contribution analysis can structure decisions, but neither replaces judgment. Effective multichannel management requires coordinated pricing, assortment, inventory, data, service, and conflict-resolution rules. Finally, legal compliance, ethical treatment, sustainability, privacy, authenticity, and responsible technology use are integral to channel performance rather than peripheral concerns.

Key Terms

Agent: An intermediary that facilitates transactions, usually for commission, without normally taking inventory ownership.

Channel conflict: Tension among channel members caused by competing goals, prices, territories, customers, or responsibilities.

Channel design: The process of deciding channel structure, members, functions, coverage, governance, and performance standards.

Channel intensity: The extent to which a product is distributed across available outlets.

Channel length: The number of intermediary levels between producer and final customer.

Contribution: Revenue remaining after relevant variable and fixed channel costs, according to the chosen accounting definition.

Distributor: A commercial intermediary that commonly combines inventory, sales, logistics, and service functions.

Exclusive distribution: Distribution through one or very few authorized intermediaries in a defined market.

Franchisee: An independently owned operator using a franchisor’s brand and operating system under an agreement.

Intensive distribution: Placement through as many suitable outlets as possible.

Marketplace: A digital platform connecting multiple sellers with customers and often providing search, payment, or fulfilment services.

Omnichannel: Coordinated management of multiple customer touchpoints as an integrated experience.

Route-to-market: The complete system used to reach, sell to, deliver to, and serve target customers.

Selective distribution: Distribution through a deliberately limited set of qualified intermediaries.

Sell-in: The producer’s sale to an intermediary.

Sell-through: The intermediary’s sale to the final customer.

Service outputs: Benefits provided by a channel, such as convenience, assortment, speed, information, and service.

Wholesaler: An intermediary that purchases, stores, consolidates, and resells products, often to retailers or business users.

Review Questions

Short Answer Questions

1. What is a marketing channel, and which three broad functions does it perform?
2. Distinguish intensive, selective, and exclusive distribution.
3. What is the difference between sell-in and sell-through?
4. Identify two advantages and two risks of a direct-to-consumer channel.
5. Why should channel length be based on required functions rather than simply minimized?

Long Answer Questions

1. Explain how brand positioning should influence channel design. Use an example of a premium or value-oriented brand.
2. Compare wholesalers, distributors, agents, franchisees, retailers, marketplaces, and DTC routes.
3. Describe a systematic process for selecting a route-to-market system.
4. Discuss the major causes of multichannel conflict and propose methods for managing them.
5. Evaluate the legal, ethical, sustainability, and data-governance issues involved in channel management.

Analytical / Application Questions

1. A premium cosmetics brand is considering intensive marketplace distribution, selective department-store distribution, and a controlled DTC model. Recommend a channel portfolio and justify it using reach, control, cost, flexibility, and brand fit.
2. A distributor produces high sell-in but low sell-through, rising returns, and frequent discounting. Diagnose the problem and design a performance-improvement plan.
3. Using a weighted scoring model, compare two channel alternatives of your own design. Select at least five criteria, assign weights summing to 1, rate each alternative consistently, and explain the limitations of the result.

Multiple Choice Questions with Answers

Question 1

Which distribution strategy seeks availability through as many suitable outlets as possible?

A. Exclusive distribution

B. Selective distribution

C. Intensive distribution

D. Agency distribution

Correct Answer: C. Intensive distribution

Question 2

Which measure records an intermediary’s sale to the final customer?

A. Sell-in

B. Sell-through

C. Trade loading

D. Channel length

Correct Answer: B. Sell-through

Question 3

A marketplace primarily differs from a traditional inventory-owning distributor because it commonly:

A. Manufactures all listed products

B. Connects sellers and customers through a platform

C. Eliminates the need for customer service

D. Guarantees exclusive territory rights

Correct Answer: B. Connects sellers and customers through a platform

Question 4

Which route generally provides the producer with the greatest direct control over customer data and brand presentation?

A. Direct-to-consumer

B. Independent wholesaler

C. Unaffiliated broker

D. Open distribution network

Correct Answer: A. Direct-to-consumer

Question 5

In the weighted scoring model, the weights assigned to all criteria should generally:

A. Sum to 0

B. Sum to 1

C. Equal the number of channels

D. Be greater than the ratings

Correct Answer: B. Sum to 1

Question 6

A channel has net revenue of $28 per unit and variable cost of $17 per unit. What is its unit contribution?

A. $11

B. $17

C. $28

D. $45

Correct Answer: A. $11

Question 7

Which intermediary commonly facilitates a transaction for commission without normally purchasing inventory?

A. Wholesaler

B. Retailer

C. Agent

D. Franchisee

Correct Answer: C. Agent

Question 8

What is a major risk of excessive exclusive distribution?

A. Unlimited customer access

B. Reduced dependence on partners

C. Limited reach and possible partner dependence

D. Automatic reduction in legal risk

Correct Answer: C. Limited reach and possible partner dependence

Question 9

Which measure is most directly concerned with whether products are available when customers seek them?

A. In-stock rate

B. Commission percentage

C. Number of sales representatives

D. Contract duration

Correct Answer: A. In-stock rate

Question 10

Why should channel decisions consider total contribution rather than gross sales alone?

A. Gross sales always equal profit

B. Channel costs and fixed investments affect economic performance

C. Contribution ignores all channel costs

D. Gross sales measure brand fit perfectly

Correct Answer: B. Channel costs and fixed investments affect economic performance