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MT 219 Marketing
Unit Six
Marketing Channels
Retailing and Wholesaling
Note: This seminar
will be recorded by
the instructor.
Review of Unit 5
• How did Unit 5 go? Questions or concerns?
• Instructor suggestions for Unit 6
• Are the Research Projects on segmentation almost
ready for submission this week?
• Additional questions?
Our Topics for This Week
• Channel importance, functions, types, and coverage
• Physical distribution and supply chain management
• Retailing types and trends
• Wholesaling types and role in marketing
Important Definitions
• Marketing Channel – A group of individuals and
organizations directing products from producers to
customers
• Value Delivery Network- Composed of the
company, intermediaries, suppliers and consumers who
are in partnership to deliver customer value systemwide.
Why do we need channels?
• Channels create value for the consumer
• Help facilitate transactions:
- Act as information conduits
- Promote the product and company
- Provide a contact for the consumer
- Match products with the consumers needs by developing appropriate
offers
- Negotiate the terms of the sale with the consumer
• Fulfill completed transaction:
- Physically transport or store goods and products
- Finance transactions
- Assume risk in undertaking channel activities
Types of Conventional Channels
• Producer - Consumer (no intermediary)
• Producer - Retailer - Consumer
• Producer – Wholesaler – Retailer – Consumer
• Producer-agent/broker – Wholesaler-Retailer –
Consumer
• These intermediaries are independent entities
Vertical Marketing Systems
• System where the producer and intermediaries act as
one system.
• Corporate VMS- One entity owns the other
intermediaries. Example: Kroger
• Contractual VMS- Uses legal agreements between
independent producer and intermediaries to provide
product or services. Example: McDonalds.
• Administered VMS- System is controlled by size and
power of one of the intermediaries or the producer.
Example: Wal-Mart.
Channel Issues and Decisions
• Number of distribution channels (coverage intensity)selective, intensive or exclusive distribution
• Conflict- horizontal and vertical
• Leadership and Power- Concept of Channel Captain
• Disintermediation
What is Supply Chain Management?
• Long term partnerships among marketing
channel members that reduce inefficiencies,
costs, and redundancies. They also develop
innovative approaches to satisfy customers.
• Emphasis is on stability for customers
Marketing Logistics
• Warehousing
• Inventory Management
• Transportation
• Logistics Information Management
Retailing
• Activities associated with providing
products to the final consumer for
their own use
Types of Retailers
• Retailers can be classified in different ways
• Amount of Service
-Self-service, limited-service or full-service
• Product Line
-Specialty, department, supermarket, convenience,
superstore
Types of Retailers- continued
• Relative Price
-Discount, off-price, factory outlet, warehouse
club
• Organizational Approach
-Chain, franchise
Retailer Marketing Decisions- Strategy
• Segmentation and targeting- Seeks to identify those
groups of people that the retailer will target.
• Store differentiation and positioning- Seeking to set the
retailer apart from the competition in the eyes of the
consumer.
• How might the segmentation, targeting and positioning
of Wal-Mart differ from JC Penny? What value is
created by each?
Retailer Marketing DecisionsMarketing Mix
• Product and service assortment-Product assortment decisions impact the types of brands that
will be carried and the level of quality the assortment will have
-Service assortment looks at the level of support, advice or
assistance that will be available for customers.
-Store atmosphere looks at what the general ambiance and store
environment will be like.
Retailer Marketing Decisions- Marketing
Mix- continued
• Price- Looks at the prices that will be charged by the
store.
• Place- Involves where stores will be located. Will it be
stand-alone or part of a shopping center or mall? Many
bricks and mortar retailers have website retail locations
also.
• Promotion- Involves how and where the retail store will
promote to their customers and public.
Retailing Trends
• Retail life cycles are shortening and new retail forms are
appearing.
- Retailing is dynamic and always evolving
- Wheel of Retailing concept
• Slower economies means consumers are becoming
thriftier
- In difficult times consumers curtail discretionary spending
- As economic conditions improve consumers will purchase more
- Consider that some products sell better in difficult times
Retailing Trends- continued
• Growth of non-store retailing as consumers buy off the
internet and through direct marketing
• Retail convergence is taking place where retailers sell
the same products to the same consumers across all
competition. This makes for keen competition.
• Megaretailers are increasingly becoming prevalent and
making it challenging for smaller retailers to compete on
the basis of price.
Retailing Trends- continued
• The growth of retail technology that help retailers
manage inventory and keep track of sales
• Major retailers are expanding internationally
• Retail stores are trying to create a community
atmosphere to provide a social retail environment
Wholesaling
• Activities involving marketing intermediaries who
purchase or represent products for resale or business
use.
• Types of wholesalers
- Merchant wholesalers- Independent companies that take title to the
goods
- Agents and brokers- Do not take title to merchandise
- Manufacturer’s sales branches and offices- Owned by maker of the
products
Wholesaler Activities
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Promote and sell the products they carry
Build assortments of goods for customers
Bulk-break goods for their customers
Offer warehouse services and often transport goods
Offer financing of purchases
Channel market information
Assume risk of title for manufacturers
Provide training and promotional services to retailers
Any Questions?
Thank you for attending!
See you next week!