Chapter 11: Retailing and Channel Management

Baines, Fill, & Page: Essentials of Marketing

 Learning Outcomes

• Define distribution channels and key

considerations in managing a channel
strategy;
• Discuss the differing types of intermediary
and their roles in the distribution channel;
• Differentiate between different distribution
channel structures and selection criteria;
• Discuss the factors influencing channel
design, structure, and strategy;
• Discuss the role, function, and importance of
retailers in the distribution channel; and
• Compare and contrast the differing types of
retailer.
Baines, Fill, & Page: Essentials of Marketing
 Case Insight - HMV
• Long regarded as one of Europe’s leading music retailers, today
HMV is more a multiple entertainment hub than a pure music
retailer.
• With tens of millions of customers visiting our multiple channels
and our HMV website generating over 55 million customer visits
alone in 2009, we operate a multi-channel strategy. HMV is also
diversifying further the channels through which we offer our
customers live entertainment experiences.

• If you were to work for HMV, what would you do to manage

its multi-channel entertainment hub to foster continued
positive customer experiences?

Baines, Fill, & Page: Essentials of Marketing

 Place
• Place or distribution is about how you can place the optimum
amount of goods and/or services before the maximum number
of your target market at times and locations they want them.

• Distribution activities are a vital element in creating customer

value and customer satisfaction.

• Variables that influence perceptions of distribution quality:

– Dependability—consistency of service;
– Time in transit;
– Market coverage;
– The ability to provide door-to-door service;
– Flexibility—handling and meeting the special needs of shippers;
– Loss and damage performance; and
– The ability to provide more than basic product delivery service.

Baines, Fill, & Page: Essentials of Marketing

 Distribution Channel Management
• When managing distribution channels we need to consider a
number of factors to make sure the channel best suits the
organization’s objectives. This includes balancing the three
elements of economics, coverage, and control.

– Economics requires us to recognize where costs are being spent

and profits being made, or should be made, in a channel to
maximize our return on investment.
– Coverage is about maximizing the amount of contact and benefits
for the customer in terms of making the product available. This
satisfies the marketer’s desire to have the product available to the
largest number of customers, in as many locations as possible, at
the widest range of times.
– Control refers to achieving the optimum distribution costs without
losing decision-making authority over the product and the way it is
marketed and supported in the delivery channel. This includes
decisions about the product, its pricing, promotion, and delivery in
the distribution channel.

Baines, Fill, & Page: Essentials of Marketing

 Benefits of Intermediaries

Baines, Fill, & Page: Essentials of Marketing

 Member Channel Functions

Baines, Fill, & Page: Essentials of Marketing

 Distribution Channel Strategy Decisions

Baines, Fill, & Page: Essentials of Marketing

 Channel Structure

Baines, Fill, & Page: Essentials of Marketing

 Types of Intermediaries

• Agents or brokers
• Merchant
• Distributors or dealers
• Franchise
• Wholesalers
• Retailers

Baines, Fill, & Page: Essentials of Marketing

 Intensity of Channel Coverage

Baines, Fill, & Page: Essentials of Marketing

 Intensity of Channel Coverage

Baines, Fill, & Page: Essentials of Marketing

 Managing Relationships in the Channel

• Channel conflict is where one channel

member perceives another channel
member to be acting in a way that
prevents the first member from
achieving its distribution activities.
• Types of channel conflict:
– Horizontal Channel Conflict
– Vertical Channel Conflict
– Hybrid Channel Conflict
Baines, Fill, & Page: Essentials of Marketing
 Logistics Management

• Logistics includes the activities that relate to

the flow of products from the manufacturer
to the customer or end consumer.
• Logistics management is the coordination of
activities of the entire distribution channel.
• It addresses:
– Activities of moving products from the factory to
customers (outbound distribution)
– Activities involved in moving products and
materials from suppliers to the factory (inbound
distribution).
Baines, Fill, & Page: Essentials of Marketing
 Logistics Functions

Baines, Fill, & Page: Essentials of Marketing

 Retailing
• Retailing is all the activities directly related to
the sale of products to the ultimate end
consumer for personal and non-business use.
• Value delivered: Convenience or speed and
ease in acquiring a product. Consists of four
elements:
– Access
– Search
– Possession
– Transaction
Baines, Fill, & Page: Essentials of Marketing
 Retailing convenience: a customer’s
perspective

Baines, Fill, & Page: Essentials of Marketing

 Retailer Types

• Department Stores
• Discount Stores
• Convenience Stores
• Limited Line Stores
• Speciality Stores
• Category-killers
• Supermarket
• Superstores
Baines, Fill, & Page: Essentials of Marketing
 Retailing Store Presence

• We can further categorize retailers according to

their presence, store or non-store retailing.
• Store presence: The physical location of a store is
seen as a source of competitive advantage,
providing crucial entry barriers to competitors.
Several characteristics make store retailing unique
from the customer viewpoint (e.g., staff,
servicescape, sensation, experience).
• Non-store presence: retailing activities resulting in
transactions that occur away from a fixed store
location.
– Direct selling
– Telemarketing
– Electronic Kiosks
– Internet Retailing
Baines, Fill, & Page: Essentials of Marketing
 Summary

• Define distribution channels and key

considerations in managing a channel strategy;
• Discuss the differing types of intermediary and
their roles in the distribution channel;
• Differentiate between different distribution
channel structures and selection criteria;
• Discuss the factors influencing channel design,
structure, and strategy;
• Discuss the role, function, and importance of
retailers in the distribution channel; and
• Compare and contrast the differing types of
retailer.

Baines, Fill, & Page: Essentials of Marketing