Download Chapter 7 Marketing Research and Decision

Chapter 12
Marketing Channels
and Supply Chain Management
Firm
Customer
Channels
o
o
o
o
o
retail stores
wholesalers
telemarketing
mail order catalogs
web sites
 "Push" : getting channels to carry your product
 "Pull" : getting consumers to ask for your product by
name
Functions performed by intermediaries
 Transactional (promote & negotiate)
 Logistical
 Facilitating (researching and financing)
Physical Distribution Gets It to Customers
TISH
TISH
Logistics
or
Physical
Distribution
Coordinating the flow of information among channel members
Supply Chain Management
 Customer-driven philosophy
 Goal is enhanced value
 Two roles
 Communicator of customer demand
 Manager of the physical flow process
Channel Specialists Adjust Discrepancies with
Regrouping Activities
Accumulating
(EGGS)
Accumulating
(Medical
Clinics)
QUANTITY
Allocating
or
Bulk-Breaking
Bulk-Breaking
COSTCO
Heterogeneity
Sorting
(Grading
Oranges)
ASSORTMENT
Assorting
Assorting
(Winn Dixie)
Channel Specialists Increase Contact
Efficiencies
Multiplicative
Pioneer
JVC
Magnavox
Sony
Rock Fan
Pop Fan
Classical Fan
"Dr. E"
Country Fan
Reggae Fan
New Age Fan
Rap Fan
Channel Specialists Increase Contact
Efficiencies
Pioneer
JVC
Dan’s
Stereos
Magnavox
Rock Fan
Pop Fan
Classical Fan
"Dr. E"
Country Fan
Reggae Fan
New Age Fan
Sony
Rap Fan
Additive
Channel Intermediaries
Retailers
Take Title to Goods
Merchant
Wholesalers
Take Title to Goods
Agents
and
Brokers
Do NOT Take Title to Goods
Factors Suggesting Type of
Wholesaling Intermediary to Use
Factor
Merchant
Wholesalers
Agents/Brokers
Nature of product
Standard
Technicality of product
Complex
Nonstandard,
custom
Simple
Product’s gross margin
High
Low
Concentration of
customers
Dispersed
Concentrated
Types of Marketing Channels
Channels for Consumer Products
Direct Channel
Producer
Consumers
Producer
Retailers
Consumers
Wholesalers
Retailers
Consumers
Wholesalers
Retailers
Consumers
TRADITIONAL
Producer
Producer
Agents or
Brokers
DUAL DISTRIBUTION & REVERSE CHANNELS
Types of Marketing Channels
Channels for Industrial Products
Business/
Organizational
Buyer
Producer
Industrial
Distributor
Producer
Producer
Producer
Business/
Organizational
Buyer
Agents
Agents
Business/
Organizational
Buyer
Industrial
Distributor
Business/
Organizational
Buyer
CHANNEL STRATEGY DECISIONS
Market exposure – optimal
Selection of a
Marketing Channel
Intensity of
Distribution
Management of
Relationships
Intensity of Market Coverage
Intensive
Distribution
Market
Exposure
Sell it where they buy it!
Intensity of Market Coverage
Selective
Distribution
Market
Exposure
Sell it where it sells best!
Intensity of Market Coverage
Extreme case of Selective
Distribution.
Market
Exposure
Exclusive
Distribution
VMS
Corporate
VMS
Vertical marketing
system
Contractual
VMS
Administered
VMS
Planned channel system to improve distribution
efficiency and cost effectiveness by integrating various
functions
Forward Integration
Backward Integration
Vertical Marketing Systems Focus on
Final Customers
Type of channel
Characteristics
Vertical marketing systems
Administered
Contractual
Corporate
Amount of cooperation
Some to
good
Fairly good
to good
Complete
Control maintained
by
Economic
power and
leadership
Contracts
One
company
ownership
Examples
General
Electric
McDonald’s
Florsheim
Firm
Customer
Channels
 "Captive Channels" : channels owned by firm
 "Non-Captive Channels" : channels not owned by
firm
 "When do retailers have "channel power"?
 firm's product is not well differentiated from competitors
 threat of backward integration (e.g. Shaw's cola)
Firm
Customer
Channels
Channel conflict examples
 Firm:Your retail prices are too high, and are driving down demand
 Retailer: With your wholesale prices, it’s the only way we can make money
 Firm:You carry too many lines, our product isn't even noticed on shelves
 Retailer: Customers come first. BTW, why don't you prune your line.
Firm
Retail store
Website
 "free – riding" by internet channel
 customers who use more than one channel get confused
•
return policies • origin of merchandise
•
different prices
Customer
Manufacturer
Vertical
Distributor
Retailer
Consumers
Horizontal
Distributor
Retailer
Retailer
Retailer
Retailer
 Questions?