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Chapter 12 Marketing Channels and Supply Chain Management Marketing Channels Marketing Channel A set of interdependent organizations that ease the transfer of ownership as products move from producer to business user or consumer. Supply Chain The connected chain of all the business entities, both internal and external to the company, that perform or support the logistics function. Marketing Channel Functions Specialization and Division of Labor Channels Fulfill Three Important Functions Overcoming Discrepancies Providing Contact Efficiency Contact Efficiency Zenith Sony RCA Toshiba Zenith Sony RCA Toshiba Circuit City Channel Intermediaries Retailer A channel intermediary that sells mainly to customers. Merchant Wholesaler An institution that buys goods from manufacturers, takes title to goods, stores them, and resells and ships them. Agents and Brokers Wholesaling intermediaries who facilitate the sale of a product by representing channel member. Channel Functions Performed by Intermediaries Contacting/Promotion Transactional Functions Negotiating Risk Taking Physically distributing Logistical Functions Storing Sorting Facilitating Function Researching Financing Channels for Consumer Products Direct Channel Retailer Channel Wholesaler Channel Agent/Broker Channel Producer Producer Producer Producer Agents or Brokers Consumers Wholesalers Wholesalers Retailers Retailers Retailers Consumers Consumers Consumers Channels for Business-toBusiness Products Direct Channel Producer Industrial Agent/Broker Agent/Broker Direct Distributor Channel Channel Industrial Channel Producer Producer Producer Agents or Brokers Agents or Brokers Industrial Distributor Industrial Distributor Industrial User Industrial User Producer Industrial User Industrial User Government Buyer Alternative Channel Arrangements Multiple Channels Different Channels May be Used Nontraditional Channels Adaptive Channels Strategic Channel Alliances Supply Chain Management Focus on Innovative Solutions Competitive with focus on Customer Satisfaction Results of Supply Chain Management Synchronized Flow Customer Value Role of Supply Chain Management Role of Supply Chain Management Communicator of customer demand from point of sale to supplier Physical flow process that engineers the movement of goods Channel Strategy Decisions Issues that Influence Channel Strategy Factors Affecting Channel Choice Levels of Distribution Intensity Market Factors Intensive Distribution Product Factors Selective Distribution Producer Factors Exclusive Distribution Levels of Distribution Intensity Intensity Level Objective Number of Intermediaries Intensive Achieve mass market selling. Convenience goods. Many Selective Work with selected intermediaries. Shopping and some specialty goods. Several Exclusive Work with single intermediary. Specialty goods and industrial equipment. One Managing Channel Relationships Channel Power Channel Control Social Dimensions of Channels Channel Leadership Channel Conflict Channel Partnering Channel Power, Control, and Leadership Channel Power A channel member’s capacity to control or influence the behavior of other channel members Channel Control A situation that occurs when one marketing channel member intentionally affects another member’s behavior. Channel Leader A member of a marketing channel that exercises authority/power over the activities of other members.
