Marketing Management

Sixteenth Edition

Designing and
Managing
Distribution Channels

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Role of Distribution Channels
Distribution channels : sets of interdependent organizations participating in the
process of making a product or service available for use or consumption
• Gather information about potential and current customers, competitors, and other actors and forces in the marketing environment.
• Develop and disseminate persuasive communications to stimulate purchasing and foster brand loyalty.
• Negotiate and reach agreements on price and other terms so that transfer of ownership or possession can be effected.
• Place orders with manufacturers.
• Acquire the funds to nance inventories at different levels in the marketing channel.
• Assume risks connected with carrying out channel work.
• Provide buyers with nancing and facilitate payment.
• Provide for buyers’ payment of their bills through banks and other nancial institutions.
• Oversee actual transfer of ownership of goods from one organization or person to another.

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Copyright © 2018, 2021 Pearson Education, Inc. All Rights Reserved.
Copyright © 2018, 2021 Pearson Education, Inc. All Rights Reserved.
Major Channel Alternatives
Three core distribution strategies

• Exclusive distribution
• Selective distribution
• Intensive distribution

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Channel-Management Decisions
TARGET MARKET
ESTABLISHING CHANNEL OBJECTIVES
SELECTING CHANNEL MEMBERS
MOTIVATING CHANNEL MEMBERS
EVALUATING CHANNEL MEMBERS

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 Channel-Management Decisions
TARGET MARKET
- De nes and pro les the target market
- Make consistent decisions about product assortment, store décor,
advertising messages and media, price, and service levels

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Channel-Management Decisions
ESTABLISHING CHANNEL OBJECTIVES
- The customers the Company aim to reach, the service output levels they want to provide, and
the associated cost and support levels
—> price, product assortment, and convenience, their own shopping goals (economic, social,
or experiential)
- Channel objectives vary with product characteristics, adapt to the larger environment,
closely observe what other rms are doing while entering new markets

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Channel-Management Decisions
SELECTING CHANNEL MEMBERS
- Determine what characteristics distinguish the better
intermediaries ?
e.g. number of years in business, other lines carried, growth and pro t
record, nancial strength, cooperativeness, and service reputation

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Channel-Management Decisions
MOTIVATING CHANNEL MEMBERS
- View intermediaries the same way the company views
its end users
- determine their needs and wants and tailor its channel
offering to provide them with superior value

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Channel-Management Decisions
EVALUATING CHANNEL MEMBERS
- evaluate intermediaries’ performance against such standards as
sales-quota attainment, average inventory levels, customer delivery
time, treatment of damaged and lost goods, and cooperation in
promotional and training programs

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MARKET-LOGISTICS DECISIONS

Warehousing Inventory

Order
Transportation
Processing

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