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A Marketing Channel is… a set of interdependent organizations that eases the transfer of ownership as

A Marketing Channel is…

a set of interdependent organizations that eases the transfer of ownership as products move from producer to business user or consumer.

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Channel Intermediaries

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Retailer

Retailer

A channel intermediary that

A channel intermediary that

sells mainly to customers.

sells mainly to customers.

Merchant

Merchant

Wholesaler

Wholesaler

Agents and

Agents and

Brokers

Brokers

An institution that buys goods

An institution that buys goods

from manufacturers, takes title

from manufacturers, takes title

to goods, stores them,

to goods, stores them,

and resells and ships them.

and resells and ships them.

Wholesaling intermediaries who

Wholesaling intermediaries who

facilitate the sale of a product by

facilitate the sale of a product by

representing channel members.

representing channel members.

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Channel Intermediaries

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Retailers Retailers Merchant Merchant Wholesalers Wholesalers Agents Agents and and Brokers Brokers
Retailers
Retailers
Merchant
Merchant
Wholesalers
Wholesalers
Agents
Agents
and
and
Brokers
Brokers
Take Title to Goods Take Title to Goods
Take Title to Goods
Take Title to Goods
Take Title to Goods Take Title to Goods
Take Title to Goods
Take Title to Goods
Do NOT Take Title to Goods Do NOT Take Title to Goods
Do NOT Take Title to Goods
Do NOT Take Title to Goods

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Channel Functions Performed by Intermediaries

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Transactional

Transactional

Functions

Functions

Logistical

Logistical

Functions

Functions

Contacting/Promotion Negotiating Risk Taking
Contacting/Promotion
Negotiating
Risk Taking
Physically distributing Storing Sorting
Physically distributing
Storing
Sorting

Facilitating

Facilitating

Functions

Functions

Researching Financing
Researching
Financing

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Logistics

Logistics
Logistics

The efficient and cost-

effective forward and

reverse flow and storage of

goods, services, and related

information, into through,

and out of channel member

companies.

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Designing a Marketing Channel System

• Analyze customer needs • Establish channel objectives • Identify major channel alternatives • Evaluate major channel alternatives

Exhibit

Exhibit 13.3

13.3

Marketing Channels

Marketing

Channels for

for Consumer

Consumer Products

Products

Exhibit Exhibit 13.3 13.3 Marketing Channels Marketing Channels for for Consumer Consumer Products Products 7 ©

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Channels for Consumer Products

Direct Direct Channel Channel
Direct
Direct
Channel
Channel

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Exhibit

Exhibit 13.4

13.4

Channels for

Channels

for Business

Business and

and Industrial

Industrial

Products

Products

Exhibit Exhibit 13.4 13.4 Channels for Channels for Business Business and and Industrial Industrial Products Products

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Business-to-Business Exchanges on the Internet

The Internet has forced traditional

distributors to expand their model.

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Companies drop the intermediary

Companies drop the intermediary

from the supply chain

from the supply chain

“Private exchanges” with select

“Private exchanges” with select

suppliers automate the supply chain

suppliers automate the supply chain

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Reverse-Flow Channels

Reverse-flow channels are important to:

(1)reuse products or containers (such as refillable chemical-carrying drums); (2)refurbish products for resale (such as circuit boards or computers) (3)recycle products (such as paper) (4)dispose of products and packaging

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Channel Strategy Decisions

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Factors Factors Affecting Affecting Channel Channel Choice Choice Market Factors Market Factors
Factors
Factors
Affecting
Affecting
Channel
Channel
Choice
Choice
Market Factors
Market Factors
Level Level of Level of Level of of Distribution Distribution Distribution Distribution Intensity Intensity Intensity Intensity
Level
Level of
Level
of
Level of
of
Distribution
Distribution
Distribution
Distribution
Intensity
Intensity
Intensity
Intensity
Intensive Distribution
Intensive Distribution
Product Factors Product Factors
Product Factors
Product Factors
Producer Factors Producer Factors
Producer Factors
Producer Factors
Selective Distribution Selective Distribution
Selective Distribution
Selective Distribution
Exclusive Distribution Exclusive Distribution
Exclusive Distribution
Exclusive Distribution

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Market Factors

Market Factors 13 © 2013 by Cengage Learning Inc. All rights reserved 4

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Levels of

Distribution Intensity

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Intensity

Level

Objective

Intensive

Achieve mass market selling. Convenience goods.

Selective

Exclusive

Work with selected intermediaries. Shopping and some specialty goods.

Work with single intermediary. Specialty goods and industrial equipment.

Number of

Intermediaries

Many

Several

One

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Managing Channel Managing Channel Relationships Relationships Explain channel leadership, conflict, and partnering 6 © 2013 by

Managing Channel

Managing

Channel Relationships

Relationships

Managing Channel Managing Channel Relationships Relationships Explain channel leadership, conflict, and partnering 6 © 2013 by

Explain channel leadership, conflict, and partnering

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Managing Channel Managing Channel Relationships Relationships Explain channel leadership, conflict, and partnering 6 © 2013 by

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Social Dimensions of Channels

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Power

Power

Control

Control

Leadership

Leadership

Conflict

Conflict

Partnering

Partnering

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Channel Power, Control,

and Leadership

Channel

Channel

Power

Power

A channel member’s capacity to control or

A channel member’s capacity to control or

influence the behavior of other channel members

influence the behavior of other channel members

Channel

Channel

Control

Control

A situation that occurs when one marketing

A situation that occurs when one marketing

channel member intentionally affects another

channel member intentionally affects another

member’s behavior

member’s behavior

Channel

Channel

Leader

Leader

A member of a marketing channel that exercises

A member of a marketing channel that exercises

authority/power over the activities of other members

authority/power over the activities of other members

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Causes of Channel Conflict

• Goal incompatibility

• Unclear roles and rights

• Differences in perception

• Intermediaries’ dependence on

manufacturer

Decisions for Decisions Channels Channels and and Distribution Distribution for Services Services Identify the special problems
Decisions for Decisions Channels Channels and and Distribution Distribution for Services Services Identify the special problems

Decisions for

Decisions

Channels

Channels and

and Distribution

Distribution

for Services

Services

Identify the special problems

and opportunities associated

with distribution in service

organizations

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Decisions for Decisions Channels Channels and and Distribution Distribution for Services Services Identify the special problems

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Terms and Responsibilities

of Channel Members

• Price policy

• Condition of sale

• Distributors’ territorial rights

• Mutual services and responsibilities

Figure 14.4

Break-Even Cost Chart

Figure 14.4 Break-Even Cost Chart

Channel-Management Decisions

• Selecting channel members

• Training channel members

• Motivating channel members

• Evaluating channel members

• Modifying channel members

Channel Power

Coercive Reward Legitimate Expert Referent
 

Coercive

 
Coercive Reward Legitimate Expert Referent
Coercive Reward Legitimate Expert Referent
 

Reward

 
Coercive Reward Legitimate Expert Referent
Coercive Reward Legitimate Expert Referent
 

Legitimate

 
Coercive Reward Legitimate Expert Referent
Coercive Reward Legitimate Expert Referent
 

Expert

 
Coercive Reward Legitimate Expert Referent
Coercive Reward Legitimate Expert Referent
 

Referent

 
Coercive Reward Legitimate Expert Referent

Table 14.2 Strategies for

Managing Channel Conflict

• Strategic

justification

• Employee

exchange

• Cooptation

• Diplomacy

• Mediation

• Legal recourse

Distribution in Service Organizations

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Distribution in Service Organizations 25 Minimizing wait times is a key factor in maintaining service quality.

Minimizing wait times is a key factor in maintaining service quality.

Managing service capability is critical to successful service distribution.

Improving service delivery makes it easier and more convenient for consumers to use the service.

Distribution in Service Organizations 25 Minimizing wait times is a key factor in maintaining service quality.
Distribution in Service Organizations 25 Minimizing wait times is a key factor in maintaining service quality.
Distribution in Service Organizations 25 Minimizing wait times is a key factor in maintaining service quality.
Distribution in Service Organizations 25 Minimizing wait times is a key factor in maintaining service quality.

Standardizing services across regions gives customers quality service wherever that service is consumed.

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