Download Marketing Channel

Part Six
Distribution Decisions
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Chapter 15
Marketing Channels and
Supply Chain Management
Objectives
• Describe nature/functions of marketing channels
• Explain how supply chain management can facilitate
distribution for benefit of all channel members, especially
customers
• Identify types of marketing channels
• Understand factors affecting decisions when selecting
marketing channels
• Examine major levels of marketing coverage
• Explore concepts of leadership, cooperation, and conflict
in channel relationships
• Specify how channel integration can improve channel
efficiency
• Examine legal issues affecting channel management
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Distribution
Activities involved in making products available
to customers when and where they want to
purchase them.
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Marketing Channel
A group of individuals and organizations that direct
the flow of products from producers to customers.
Modern Distribution Management
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Marketing Intermediary
A middleman linking producers to other middlemen
or ultimate consumers through contractual
arrangements or through the purchase and resale
of products.
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Marketing Channel Activities
Performed By Intermediaries
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Potential Channel Members
• Wholesalers- buy and sell products to
other wholesalers, retailers and industrial
customers
• Retailers- purchase products and resell
them to ultimate consumers
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Distribution Decisions
• powerful influence on the rest of the
marketing mix
• determine a product’s presence and
accessibility to buyers
• entail long-term commitment
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Channel Functions
• Create utility
– Time
– Place
– Possession
• Facilitate exchange efficiencies
• Form Supply Chains
– Total distribution system that serves customers and
creates competitive advantage
Homeland Security and Supply Chain Management
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Efficiency In Exchanges
Provided By Intermediary
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Supply Chain Management
Long-term partnerships among marketing channel
members that reduce inefficiencies, costs, and
redundancies and develop innovative approaches
to satisfy customers
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Tasks In Supply
Chain Management
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Technology in Supply
Chain Management
• Integrated information sharing
– Reduction of costs
– Improved service
– Enhanced value to customer
• Tools improve overall performance
– Electronic billing
– Purchase order verification
– Image processing
• Customer Relationship Management systems
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Types of Marketing
Channels – Consumer Products
• Direct marketing channels vs.
intermediaries
• Goods from producer – retailer – customer
• Goods from producer – wholesaler –
retailer – customer
• Goods from producer – agent – wholesaler
– retailer – customer
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Typical Marketing Channels
For Consumer Products
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Types of Marketing
Channels – Business Products
• Direct channels
• Industrial distributor facilitates exchange
– Industrial distributor is an independent
organization that takes industrial products’
title and carries inventory
• Manufacturers’ agent
– Does not acquire title or take possession
• Manufacturers’ agent and industrial
distributor
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Typical Marketing
Channels For Business Products
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Types of Marketing Channels – Multiple
Marketing Channels and Channel Alliance
• Dual distribution
– The use of two or more marketing channels to
distribute the same product to the same target market
• Strategic Channel Alliance
– The products of one organization are distributed
through the marketing channels of another
Collaborative Forecasting Between Sears and Michelin
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Selecting
Marketing Channels
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Selecting Channels
• Customer Characteristics – consumer vs.
business
• Product Attributes – expensive vs.
standardized; durable vs. fragile
• Type of Organization – large vs. small
• Competition – high vs. low
• Marketing Environmental Forces
• Characteristics of Intermediaries
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Intensity Of
Market Coverage
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Intensity Of Distribution
• Intensive – using all available outlets to
distribute product
• Selective – using only some available
outlets to distribute a product
• Exclusive – using a single outlet in a
fairly large geographic area to distribute
a product
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Supply Chain
Management – Channel Leadership
• Channel captain – organizes and controls
marketing channel
• Channel power – ability of one channel
member to influence another member’s
goal achievement
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Supply Chain
Management – Channel Cooperation
• Vital to gain something from other members
• Enables members to
– Speed up inventory replenishment
– Improve customer service
– Cut costs
• Improve channel cooperation
– View chain as competing against others
– Members direct efforts to common objectives
– Precise definition of each member’s tasks
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Supply Chain
Management – Channel Conflict
• Self-interest
• Poor communication
• Increased use of multiple channels
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Channel Integration
• Vertical – combining two or more stages of the
channel under one management
• Horizontal – combining organizations at the
same level of operation under one management
Seven Myths of Channel Integration
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Vertical
Marketing Systems
• A marketing channel managed by a single
channel member to achieve efficient distribution
satisfying target market customers
– Corporate
– Administered
– Contractual
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Legal Issues In
Channel Management
• Dual Distribution
• Restricted Sales Territories
• Tying Agreement- supplier furnishes product to
channel member with stipulation channel
member must purchase other products
• Exclusive Dealing- manufacturer forbid
intermediary to carry products of competitors
• Refusal to Deal
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