Marketing Channels

Marketing Channels

 Marketing channels—sets of interdependent

organizations involved in the process of
making a product or service available for use
or consumption.
Push and Pull Strategies

 Push strategy—uses the manufacturer’s

sales force and trade promotion to induce
intermediaries to carry, promote, and sell the
products to end users.
 Pull strategy—manufacturer uses
advertising and promotion to persuade
consumers to ask intermediaries for the
product, thus inducing the intermediaries to
order it.
Role of Marketing Channels

 Performs the work of moving products from

producers to consumers, overcoming time,
place, and possession gaps.
 Forward flow functions
 Backward flow functions
 Both directions
Commonalities Among All
Channel Functions
 They use up scarce resources.
 They can often be performed better through
specialization.
 They can be shifted among channel
members.
Channel Levels

 Zero-level channel
 One-level channel
 Two-level channel
 Three-level channel
Channel-Design Decisions

 Analyze customers’ desired service output

levels
 Establish objectives and constraints
 Identify major channel alternatives
 Evaluate the major alternatives
Analyzing Customers’
Desired Service Output
Levels
 Lot size

 Waiting and delivery time

 Spatial convenience
 Product variety
 Service backup
Establishing Objectives and
Constraints
 State channel objectives in terms of targeted
service output levels.
 Objectives vary with product characteristics.
 Environmental factors:
 Competitors’ channels
 Economic conditions
 Legal regulations and restrictions
Identifying Major Channel
Alternatives
 Types of intermediaries  Terms and
 Merchants responsibilities of
 Facilitators channel members
 Number of  Price policy
intermediaries  Conditions of sale
 Exclusive  Distributors’ territorial
rights
 Selective
 Mutual services and
 Intensive
responsibilities
Evaluating the Major
Alternatives
 Determine whether own sales force or a
sales agency will produce more sales.
 Estimate the costs of selling different
volumes through each channel.
Channel-Management
Decisions
 Selecting channel members
 Training and motivating channel members
 Evaluating channel members
 Modifying channel arrangements
Channel Integration and
Systems
 Vertical marketing system
 Horizontal marketing system
 Multichannel marketing system
Vertical Marketing System
(VMS)
 Producer, wholesaler(s), and retailer(s) acting
as a unified system.
 Types:
 Corporate VMS
 Administered VMS
 Contractual VMS
 Wholesaler-sponsored voluntary chains
 Retailer cooperatives
 Franchise organizations
Horizontal Marketing
Systems
 Two or more unrelated companies put
together resources or programs to exploit an
emerging marketing opportunity.
Integrated Multichannel
Marketing Systems
 Multichannel marketing—a single firm uses two or
more marketing channels to reach one or more
customer segments.
 Integrated marketing channel system—the
strategies and tactics of selling through one channel
reflect the strategies and tactics of selling through
other channels.
 Benefits:
 Increased market coverage
 Lower channel costs
 More customized selling