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McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All Rights Reserved.
FIGURE 15-1 The variety of terms used
for marketing intermediaries that vary in
specificity and use in consumer and
business markets
15-2
LO1
NATURE AND IMPORTANCE OF
MARKETING CHANNELS
THE VALUE CREATED BY INTERMEDIARIES

Marketing Channel

Functions Performed by Intermediaries
• Transactional Function
• Logistical Function
• Facilitating Function

Utilities Received by Consumers
15-3
FIGURE 15-2 Intermediaries minimize
transactions and the cost of distribution for
producers and customers
15-4
FIGURE 15-3 Marketing channel
intermediaries perform three functions, each
consisting of different activities
15-5
CHANNEL STRUCTURE & ORGANIZATION
LO2
MARKETING CHANNELS FOR
CONSUMER GOODS AND SERVICES

Direct Channel

Indirect Channel
• Retailers
• WholesalersRetailers
• AgentsWholesalersRetailers
15-6
FIGURE 15-4 Common marketing channels
for consumer offerings by the kind and
number of intermediaries
15-7
CHANNEL STRUCTURE & ORGANIZATION
LO2
MARKETING CHANNELS FOR
BUSINESS GOODS AND SERVICES

Direct Channel

Indirect Channel
• Industrial Distributor
• Agents
• AgentsIndustrial Distributors
15-8
FIGURE 15-5 Common marketing channels
for business offerings by the kind and
number of intermediaries
15-9
CHANNEL STRUCTURE & ORGANIZATION
LO2
ELECTRONIC & DIRECT MARKETING CHANNELS;
MULTICHANNEL MARKETING

Electronic Marketing Channels

Direct Marketing Channels

Multichannel Marketing
15-10
FIGURE 15-6 Consumer electronic
marketing channels are similar to those for
consumer and business offerings
15-11
CHANNEL STRUCTURE & ORGANIZATION
LO2
DUAL DISTRIBUTION &
STRATEGIC CHANNEL ALLIANCES

Dual Distribution

Strategic Channel Alliances
15-12
FIGURE 15-7 Functions performed by
independent wholesaler types
15-13
LO2
CHANNEL STRUCTURE & ORGANIZATION
CHANNEL INTERMEDIARIES

Merchant Wholesalers
• Full-Service Wholesalers
 General Merchandise
(Full-Line) Wholesalers
 Specialty Merchandise
(Limited-Line) Wholesalers
15-14
LO2
CHANNEL STRUCTURE & ORGANIZATION
CHANNEL INTERMEDIARIES

Merchant Wholesalers
• Limited-Service Wholesalers
 Rack Jobbers
 Cash and Carry Wholesalers
 Drop Shippers/Desk Jobbers
 Truck Jobbers
15-15
LO2
CHANNEL STRUCTURE & ORGANIZATION
CHANNEL INTERMEDIARIES

Agents and Brokers
• Manufacturer’s Agents
• Selling Agents
• Brokers

Manufacturers
• Branch Offices
• Sales Offices
15-16
FIGURE 15-8 Three types of vertical
marketing systems: corporate, contractual
(most popular), and administered
15-17
LO2
CHANNEL STRUCTURE & ORGANIZATION
VERICAL MARKETING SYSTEMS

Administered Systems

Channel Partnership
15-18
LO3
CHANNEL CHOICE AND MANAGEMENT
FACTORS AFFECTING CHANNEL CHOICE

Environmental Factors

Consumer Factors

Product Factors

Company Factors
15-19
LO3
CHANNEL CHOICE AND MANAGEMENT
CHANNEL CHOICE CONSIDERATIONS

Target Market Coverage
• Intensive Distribution
• Exclusive Distribution
• Selective Distribution
15-20
LO3
CHANNEL CHOICE AND MANAGEMENT
CHANNEL CHOICE CONSIDERATIONS

Satisfying Buyer Requirements
• Information
• Convenience
• Variety
• Pre- or Post-Sale Service
15-21
LO3
CHANNEL CHOICE AND MANAGEMENT
CHANNEL CHOICE CONSIDERATIONS

Profitability
• Margins Earned
• Channel Costs
15-22
LO4
CHANNEL CHOICE AND MANAGEMENT
CHANNEL RELATIONSHIPS

Sources of Channel Conflict
• Vertical Conflict
• Horizontal Conflict
15-23
LO4
CHANNEL CHOICE AND MANAGEMENT
CHANNEL RELATIONSHIPS

Channel Captain

Channel Influence
• Economic
• Identification
• Expertise
• Legitimate Right
15-24
LO4
CHANNEL CHOICE AND MANAGEMENT
CHANNEL RELATIONSHIPS

Legal Considerations
• Dual Distribution
• Tying Arrangements
• Vertical Integration
• Refusal to Deal
• Exclusive Dealing
• Resale Restrictions
15-25
FIGURE 15-9 The Clayton Act and Sherman
Act place legal restrictions on specific
marketing channel strategies and practices
15-26