Channel Partner Motivation

Retailers
• Are Growing Larger
• Enjoy Substantial Channel Power
• Often Operate on Low Price / Low Margin
Model
• Operate in Saturated Markets and Fight for
Market Share
• Retailers Act as Buying Agents for Customers
Rather than as Selling Agents for Suppliers
 Conventional distribution channel

• A channel consisting of one or more

independent producers, wholesalers, and
retailers, each a separate business seeking to
maximize its own profits, perhaps even at the
expense of profits for the system as a whole
 Vertical marketing system (VMS)

A channel structure in which producers,

wholesalers, and retailers act as a unified
system. One channel member owns the
others, has contracts with them, or has so
much power that they all cooperate
• Corporate VMS
• Contractual VMS
• Administered VMS
 Horizontal marketing System
Two or more companies at one channel
level join together to increase coverage
 Hybrid Marketing
System
A single firm sets up two or more
marketing channels to increase
coverage
Example: Retailers, Catalogs, and
Sales Force
 Common Incentives
• Cooperative advertising allowances
• Payments for interior displays
• Contests for buyers, salespeople, etc.
• Allowances for warehousing functions
• Payments for window display space
• Detail men who check inventory
• Demonstrators
• Coupon-handling allowance
• Free goods