Chapter 16: Chapter 16: Selecting & Managing Selecting & Managing Marketing Channels Marketing Channels

Otterbein College Winter 2000

Objectives
Work Performed by Marketing Channels Channel-Design Decisions Channel-Management Decisions Channel Dynamics

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How a Distributor Reduces the Number of Channel Transactions

1 2 3 4 5 6 7 8 9
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A. Number of contacts without a distributor MxC=3X3=9

= Manufacturer

= Customer 16-3

How a Distributor Reduces the Number of Channel Transactions

1 Store

4 5

B. Number of contacts with a distributor MxC=3+3=6

3
= Manufacturer

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= Customer

16-4 = Distributor

Distribution Channel Functions

Information Information Transfer Transfer Payments Payments Physical Physical Distribution Distribution Risk Taking Risk Taking
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Communication Communication Negotiation Negotiation Ordering Ordering Financing Financing

16-5

Consumer Marketing Channels Consumer Marketing Channels

0-level channel Mfr. Mfr. 1-level channel Mfr. Mfr. 2-level channel Wholesaler Mfr. Mfr. Wholesaler 3-level channel Wholesaler Mfr. Mfr. Wholesaler
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Consumer Consumer Retailer Consumer Retailer Consumer Retailer Consumer Retailer Consumer Jobber Jobber Retailer Consumer Retailer Consumer
16-6

Industrial Marketing Channels

Manufacturer

Industrial distributors

Manufacturers representative Manufacturers sales branch

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Consumer
16-7

Customers Desired Service Levels

Lot size Waiting time Spatial convenience Product variety Service backup
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16-8

Channel Management Decisions Channel Management Decisions

Selecting Selecting Training Training Motivating Motivating Evaluating Evaluating

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FEEDBACK
16-9

Types of Vertical Marketing Systems Types of Vertical Marketing Systems

Corporate Corporate Common Ownership at Different Common Ownership at Different Levels of the Channel Levels of the Channel Administered Administered Leadership is Assumed by One or Leadership is Assumed by One or a Few Dominant Members a Few Dominant Members Contractual Contractual Contractual Agreement Among Contractual Agreement Among Channel Members Channel Members

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16-10