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MANAGING MARKETING CHANNELS
OF DISTRIBUTION AND
LOGISTICS
Professor Chip Besio
Cox School of Business
Southern Methodist University
The variety of terms used for marketing
intermediaries that vary in use in consumer
and business markets
Intermediaries minimize transactions and
the cost of distribution for producers and
customers
NATURE AND IMPORTANCE OF
MARKETING CHANNELS
THE VALUE CREATED BY INTERMEDIARIES

Marketing Channel

Functions Performed by Intermediaries
• Transactional Function
• Logistical Function
• Facilitating Function

Utilities Received by Consumers
Marketing channel intermediaries perform
three functions, each consisting of different
activities
Common marketing channels for consumer
offerings by the kind and number of
intermediaries
Common marketing channels for business
offerings by the kind and number of
intermediaries
One Telecom Company’s Consumer Market Channels
CUSTOMER
ACQUISITION
CUSTOMER
DEVELOPMENT
MASS
MEDIA
MAILBOX
MARKETING
FACE TO
FACE
LIFESTYLE
INTERCEPT
Business
Office
Best Customer
Centers
Advertising
Response
Direct
Mail
Retail
Stores
Military
Catalog
Express
Kiosks
Smart
Moves
RSC Service
Upselling
Direct Mail
Prin
t
Retiremen
t
Internet
National
Retailers
Kids
Away
Specialty
Agent
s
Employee/
Employer
Association
s
TV
Radio
Newcomer
Campu
s
AFFINITY
Outbound
Telemarketin
g
Local Agents
Direct Sales
Welcome
Package
Director
y
Event
Marketin
g
On the
Move
Co-Marketing
Partners
CHANNEL STRUCTURE & ORGANIZATION
ELECTRONIC & DIRECT MARKETING CHANNELS;
MULTICHANNEL MARKETING

Electronic Marketing Channels

Direct Marketing Channels

Multichannel Marketing
Consumer electronic marketing channels
are similar to those for consumer and
business offerings
CHANNEL STRUCTURE & ORGANIZATION
DUAL DISTRIBUTION &
STRATEGIC CHANNEL ALLIANCES

Dual Distribution

Strategic Channel Alliances
HELP YOUR CHILD FEEL BETTER WITH
TRIAMINIC® PRODUCTS AND A REDBOX
MOVIE RENTAL
The Top Five
Reasons for Selling Through Distributors
1.
2.
3.
4.
5.
Customers demand it.
Market access.
Lower marketing and selling expenses.
Distributors perform necessary functions.
Reduced collection problems.
Functions performed by independent
wholesaler types
GOING ONLINE
Visit an Apple Store to See
What All the Excitement is About
Three types of vertical marketing systems:
corporate, contractual (most popular), and
administered
McDonalds and H&R Block
What vertical marketing system does each use?
CHANNEL CHOICE AND MANAGEMENT
FACTORS AFFECTING CHANNEL CHOICE

Environmental Factors

Consumer Factors

Product Factors

Company Factors
CHANNEL CHOICE AND MANAGEMENT
CHANNEL CHOICE CONSIDERATIONS

Target Market Coverage
• Intensive Distribution
• Exclusive Distribution
• Selective Distribution
CHANNEL CHOICE AND MANAGEMENT
CHANNEL CHOICE CONSIDERATIONS

Profitability
• Margins Earned
• Channel Costs

Global Dimensions of
Marketing Channels
USING MARKETING DASHBOARDS
Channel Sales and Profit at
Charlesburg Furniture
CHANNEL CHOICE AND MANAGEMENT
CHANNEL RELATIONSHIPS

Sources of Channel Conflict
• Vertical Conflict
• Disintermediation
• Horizontal Conflict
CHANNEL CHOICE AND MANAGEMENT
CHANNEL RELATIONSHIPS

Legal Considerations
• Dual Distribution
• Tying Arrangements
• Vertical Integration
• Refusal to Deal
• Exclusive Dealing
• Resale Restrictions
The Clayton Act and Sherman Act place
legal restrictions on specific marketing
channel strategies and practices