Download What is Marketing?

Chapter Eleven
Marketing Channels and
Supply Chain Management
with Duane Weaver
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Marketing or Distribution Channel
A set of interdependent organizations
involved in the process of making a
product or service available for use or
consumption by the consumer or
business user.
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Why Use Channel Members
• The use of intermediaries results from
their greater efficiency in making goods
available to target markets.
• Offers the firm more than it can achieve
on its own through the intermediaries:
– Contacts.
– Experience.
– Specialization.
– Scale of operation.
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Channel Functions
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Information.
Promotion.
Contact.
Matching.
Negotiation.
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• Physical
distribution.
• Financing.
• Risk taking.
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Wholesalers/Retailers
• Wholesalers.
– Merchant wholesalers.
– Agents and brokers.
– Manufacturer’s sales branches & offices.
• Retailers.
– Amount of service .
– Product line.
– Relative prices.
– Retail organization.
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Wholesaler Marketing Decisions
• Wholesaler strategy.
– Target market.
– Service positioning.
• Wholesaler marketing mix.
– Product and service assortment.
– Prices.
– Promotion.
– Place (location).
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What is Retailing?
Retailing includes all the activities
involved in selling products or services
directly to final consumers for their
personal, non-business use.
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Retailing Functions
• Information function – to customers and
manufacturers.
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Product function – help define products.
Price function – promotions, negotiation.
Place function – convenience to consumers.
Promotion function – run their own promos.
Ownership function – take title and absorb
the risk.
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Classifying Retail by Amount of Service
• Self-service retailers:
– Serve customers who are willing to perform their
own “locate-compare-select” process to save
money.
• Limited-service retailers:
– Provide more sales assistance because they carry
more shopping goods about which customers need
information.
• Full-service retailers:
– Usually carry more specialty goods for which
customers like to be “waited on.”
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Product Line Retailers
• Specialty stores.
– Narrow product line, deep assortment.
• Department stores.
– Wide variety of product lines.
• Supermarkets.
– Wide variety of food, laundry, household
products.
• Convenience stores.
– Limited line of high-turnover goods.
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Product Line Retailers (cont’d)
• Superstores.
– Large assortment of food and non-food
items.
• Category killer.
– Big box specialty store.
• Service retailers.
– Provide services rather than tangible
goods.
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Relative Price Retailers
• Discount stores.
– Sells standard merchandise at lower prices by
accepting lower margins and selling at higher
volume.
• Off-price retailers.
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Buys at below wholesale, sells at less than retail.
Independents.
Factory outlets.
Warehouse clubs.
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Channel Behaviour
• The channel is most effective when:
– Each member is assigned tasks it can do best.
– All members cooperate to attain channel goals.
• If this does not happen, conflict occurs:
– Horizontal conflict occurs among firms at the same
level of the channel (e.g. retailer to retailer).
– Vertical conflict occurs between different levels of
the same channel (e.g. wholesaler to retailer).
• Some conflict can be healthy
competition.
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Channel Conflict
• Disagreement between members over
goals and roles.
• Horizontal conflict.
– Conflict between firms on the same level.
• Vertical conflict.
– Conflict between firms on different levels.
• Disintermediation.
– Displacement of a traditional member from
the marketing channel.
– Selling direct via the Internet.
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Types of Channels
• Conventional channel.
– Channel members independently owned.
• Vertical channel.
– Channel members act as a unified system.
• Horizontal channel.
– Two or more companies on the same level
join together for mutual gain.
• Hybrid channel.
– Combination to serve different segments.
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International Distribution
• Exporting.
– Direct.
– Indirect.
• Joint ventures.
– Licensing.
– Contract manufacturing.
– Management contracting.
– Joint ownership.
• Direct investment.
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Channel Design/Management
• Selection.
– Fit with channel objectives.
• Motivation.
– Maintain strong partnerships.
– Reward good performance.
– Assist or replace weaker ones.
• Evaluation.
– Compare performance against standards
and objectives.
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Major Logistics Functions
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Order processing.
Warehousing.
Inventory management.
Transportation.
Integrated supply chain management.
– Cross-functional teamwork in company.
– Building channel partnerships.
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Thanks!
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