The company has to evaluate adding or dropping individual middlemen or individual channels and possibly modifying the whole

channel system. The steps of Channel Decision Making are: Selecting Channel Members Selecting channel members would involve: 1. Evaluate experience, 2. Number of lines carried, 3. Growth and profit record 4. Solvency, cooperativeness, and reputation Training Channel Members Companies need to plan and implement careful training programs for their intermediaries, because they will be viewed as the company by end users . Motivating Channel Members A company needs to view its intermediaries in the same way it views its end users. It needs-to determine intermediaries’ needs and construct a channel positioning such that it’s, channel offering is tailored to provide superior value to these intermediaries Evaluating Channel Members They are evaluated on the following parameters 1. Sales quota attainment, 2. Average inventory levels, 3. Customer delivery time, 4. Treatment of damaged and lost goods, 5. Cooperation in promotional and training programs Modifying Channel Arrangements A producer must periodically review and modify its channel arrangement. Modification becomes necessary when the

consumer buying patterns change. wholesalers. Vertical Marketing System A distribution channel structure in which producers. innovative distribution channels emerge. not through common ownership or contractual ties. The product moves into later stage in the product life cycle.1. has contracts with them. distribution channel is not working as planned. bargaining power. A. but through the size and power of one of the parties. the market expands new competition arises. or has so much power that they all cooperate. Contractual VMS could have the following forms: • Wholesaler-sponsored voluntary chains • Retailer cooperatives • Franchise organizations . Bata. Conventional Marketing System A channel consisting of one or more independent producers. Contractual VMS A vertical marketing system in which independent firms at different levels of production and distribution join together through contracts to obtain more economies or sales impact than they could achieve alone. and retailers act as a unified system. 2. VMS s arose as a result of strong channel members’ attempts to control channel behavior and eliminate the conflict that results when independent members pursue their own objectives. VMS achieve economies through size. Corporate VMS A vertical marketing system that combines successive stages of production and distribution under single ownership—channel leadership is established through common ownership. wholesalers. 5. 3. Growth of vertical. 4. Vertical marketing system comprises of i. and retailers each a separate business seeking to maximize its own profits even at the expense of profits for the system as a whole. Administered VMS It is a vertical marketing system that coordinates successive stages of production and distribution. horizontal and multi channel marketing systems. ii. and elimination of duplicated ser-vices. Ex. iii. One channel member owns the others.

• Multi channel marketing—single firm uses two or more marketing channels to reach one or more customer segments—advantages: increased coverage. customized selling. complementers. • Planning channel architecture (companies thinking through their channel architecture— which are efficient and not.conflict involves conflict between members at the same level within the channel.exists when the manufacturer has established two or more channels that sell to the same market Following highlight the common causes of conflict • Goal incompatibility • Unclear roles and rights • Differences in perception • “Over” dependence Following can be used as conflict resolving methods: 1. Adoption of superordinate goals 2. strivers.means conflict between different levels within the same channel • Horizontal channel conflict. • Two or more unrelated firms put together resources or programs.• Manufacturer-sponsored retailer franchise or manufacturer-sponsored wholesaler franchise B. marketing resources or other variables to take on the venture alone • Can be permanent or temporary C. technology. • Each firm lacks the capital. • Multi channel conflict. Co-optation—winning support at different levels 4. arbitration . Multichannel Marketing Systems A distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments. and developing new means) • Roles of individual firms in a multi channel system: (insiders. transients. mediation. Exchange of people between channel levels 3. Joint membership in and between trade associations 5. Horizontal Marketing Systems It is a channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity. outside innovators) CHANNEL CONFLICT Disagreement among marketing channel members on goals and roles— Types of conflict • Vertical channel conflict . Diplomacy. lower cost.

• They provide for the successive storage and movement of physical products. and other actors and forces in the marketing environment. • They develop and disseminate persuasive communications to stimulate purchasing. A strong distribution system can be a competitive advantage • Channel decisions involve long-term commitments to other firms . Marketing communications etc. competitors. • They place orders with manufacturers. • They provide for buyers’ payment of their bills through banks and other financial institutions In brief the following highlights the importance of marketing channels:• Channel choices affect other decisions in the marketing mix • Pricing.Members of the marketing channel perform a number of key functions: • They gather information about potential and current customers. • They acquire the funds to finance inventories at different levels in the marketing channel • They assume risks connected with carrying out channel work. • They reach agreements on price and other terms so that transfer of ownership or possession can be affected.


these are typically a wholesaler and a retailer A three-level channel_ contains three intermediaries.-Internet selling.g. A one-level channel contains one selling intermediary. food distribution may involve as many . ‘indirect’ via a wholesaler) .g.. ‘direct’ to a consumer. e. From the producer’s point of view. home par-ties. telemarketing. In consumer markets. There are six basic ‘channel’ decisions: 1. such as a retailer. The major examples are door-todoor six levels. mail order. obtaining information about end users and exercising control becomes more difficult as the number of channel levels increases. A two level channel contains two intermediaries.A zero-level channel (also called a direct-marketing channel) consists of a manufacturer selling directly to the final customer. there can be many brokers and agents involved. TV selling. Do we use direct or indirect channels? (e.

Which companies as intermediaries to avoid ‘intrachannel conflict’ (i.e.g. WHAT ARE DIFFERENT TYPES OF RETAILERS? 1. 3. Product lines Specialty stores Narrow product lines with deep assortments Department stores Wide variety of product lines Supermarkets Convenience stores Limited line Superstores Food. 5. non business use. 6. infighting between local distributors) WHAT IS RETAILING? Retailing includes all the activities involved in selling goods or services directly to final consumers for personal. Amount of service Self-service retailers Customers are willing to self-serve to save money Discount stores Limited-service retailers Most department stores Full-service retailers Salespeople assist customers in every aspect of shopping experience High-end department stores Specialty stores 2. 4. nonfood. . and services Category killers 2. A retailer or retail store is any business enterprise whose sales volume comes primarily from retailing. how many retailers in Southern Spain).Single or multiple channels Cumulative length of the multiple channels Types of intermediary (see later) Number of intermediaries at each levels (e.

Organizational approach Corporate chain stores Commonly owned / controlled Voluntary chains Wholesaler-sponsored groups of independent retailers Retailer cooperatives Groups of independent retailers who buy in bulk Franchise organizations Based on something unique Merchandising conglomerates Diversified retailing lines and forms under central ownership WHAT ARE VARIOUS RETAIL MARKETING DECISIONS? Target marketing and positioning Product assortment. Service mix.Giant specialty stores 3. store’s atmosphere Price Promotion Place (location) . Relative prices Discount stores Low margins are offset by high volume Off-price retailers Independent off-price retailers Factory outlets Warehouse clubs 4.

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