Support specialists are active channel participants that provide services essential to the overall distribution process. Unlike the functional service counterparts the typical support firm does not engage in actual day to day channel operations. To understand the role of support service providers one’s appropriate perspective must be that their channel involvement is essential, even critical, at the time and for the duration they are required. Many support services are not very apparent, in contrast to the highly visible operations of primary and functional specialized channel members. The support specialist has one additional distinction in comparison to a functional specialist. Whereas a significant portion of the service performed by functional specialists is capable of being completed internally, few firms are able to provide support services internally. Thus, when a channel alignment requires critical support services, the critical issue is to identify the most attractive source. Few do it yourself options are available.
The provision of adequate and attractively priced financial support is crucial to most business endeavors. A significant aspect of financing is to provide capital for the inventories and accounts receivables that are required at each level within the distribution channel. A wide range of financial institutions, such as commercial banks, brokerage houses, savings and loans, insurance companies, investment bankers and finance companies, are available to provide primary channel members with sophisticated advice and essential operating capital. Because most firms use debt to finance fixed assets, they require credit lines to facilitate operations. To the extent that a firm depends upon credit to facilitate operations, its relationship with financial institutions is extremely important.
During the past decade considerable restructuring has taken place in the financial services industry. The result, similar to the outcome transportation deregulation, has been a general blurring of historic differences between institutions. While traditionally the role of financial institutions has not been readily apparent to the marketing channel structure, several have recently become very active as a result of their involvement in acquisition and takeovers. The result is that some financial firms such Kravis, Kohlberg and Roberts have become very active managerially in the firms they have aquired.
Public corporation can generate cash from stock sales, retained earnings, and debt. Private firms rely upon owner equity, earnings and debt for cash generation. Because of a critical need to fund expansion, research and development, capital improvements, and new business opportunities, the support provided by specialized financial institutions is essential to channel members. Few firms can sustain operations without the assistance of external financial partners.
A large number of firms provide information services to primary channel members. A variety of specialized firms have proliferated as a result of the rapid expansion of formation hardware and software technology.
The most fundamental type of information specialists participating in channel operations are firms that provide basic communication services and equipment such as telephones, computers, leased lines, and facsimile machines. Basic communication services and technical assistance are essential to the maintenance of sales and logistics continuity throughout the marketing channel.
With the advent of satellite technology a variety of new type of service specialists have emerged. Specialists such as Hughes Network Systems, Quick Response Services, Inc., IBM Information network and GE information services provide channel members with a variety of coordinated services. The rapid growth of such service businesses is linked to varied aspects of Electronic Data Interchange (EDI). Specialized firms, such as value added networks (VANs) standards associations, consultants and coordination groups, communication protocol translators, UPC electronic catalogue and various highly focused technical services, have become regular channel participants.
While such technical service providers have not been around, they can be expected to become more significant as future channel arrangements merge. In an increasing number of channels, suppliers are receiving what is called the EDI mandate. Leaders in many industries, such as automotive and retailing are committed to expanding EDI arrangements and expect channel partners to become actively involved. Some firms such as GE require potential suppliers to certify EDI capabilities as a prerequisite to further consideration as vendors. In 1988, there were approximately 5000 firms in the United States using EDI. The projection is for the number of EDI active firms double annually during the immediate future. By 1995, 70 percent of United States firms have gained some degree of EDI literacy. In 2007 it may be almost cent percent. Similar EDI adoption rates are projected throughout the world. The variety and number of information services and technical support firms that will ultimately emerge to facilitate information technology adoption throughout the channel are difficult to estimate.