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Chapter 16
Marketing Channels
In this chapter…
 Marketing channels of distribution and why
intermediaries are needed.
 Traditional marketing channels, electronic marketing
channels, and vertical marketing systems.
 Factors that marketing executives consider when
selecting and managing a marketing channel.
15-2
The variety of terms used
for marketing intermediaries that vary in
specificity and use in consumer and business
markets
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
CHANNEL STRUCTURE & ORGANIZATION
MARKETING CHANNELS FOR
CONSUMER PRODUCTS AND SERVICES

Direct Channel

Indirect Channel
• Retailers
• WholesalersRetailers
• AgentsWholesalersRetailers
Common marketing channels for consumer
products and services by the kind and number of
intermediaries
CHANNEL STRUCTURE & ORGANIZATION
MARKETING CHANNELS FOR
BUSINESS PRODUCTS AND SERVICES

Direct Channel

Indirect Channel
• Industrial Distributor
• Agents
• AgentsIndustrial Distributors
Common marketing channels for business
products and services by the kind and number of
intermediaries
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 products and
services
CHANNEL STRUCTURE & ORGANIZATION
DUAL DISTRIBUTION &
STRATEGIC CHANNEL ALLIANCES


Dual Distribution
Strategic Channel
Alliances
Honey Nut
Cherrios Ad
Three types of vertical marketing systems:
corporate, contractual (most popular), and
administered
CHANNEL STRUCTURE & ORGANIZATION
VERICAL MARKETING SYSTEMS

Vertical Marketing Systems

Corporate Systems
• Forward Integration
• Backward Integration

Contractual Systems
• Wholesaler-Sponsored Voluntary Chains
• Retailer-Sponsored Cooperatives
CHANNEL STRUCTURE & ORGANIZATION
VERICAL MARKETING SYSTEMS

Contractual Systems
• Franchising
 Manufacturer-Sponsored Retail Franchises
 Manufacturer-Sponsored Wholesale Franchises
 Service-Sponsored Retail Franchises
 Service-Sponsored Franchises

Administered Systems
CHANNEL CHOICE AND MANAGEMENT
CHANNEL CHOICE CONSIDERATIONS

Target Market Coverage (Density)
• Intensive Distribution
• Exclusive Distribution
• Selective Distribution
Gucci
CHANNEL CHOICE AND MANAGEMENT
CHANNEL CHOICE CONSIDERATIONS


Buyer Requirements
• Information
• Convenience
• Variety
• Pre- or Post-Sale
Service
Profitability
CHANNEL CHOICE AND MANAGEMENT
CHANNEL RELATIONSHIPS

Sources of Channel Conflict
• Vertical Conflict
• Disintermediation
• Horizontal Conflict
CHANNEL CHOICE AND MANAGEMENT
CHANNEL RELATIONSHIPS

Channel Captain

Channel Influence
• Economic
• Identification
• Expertise
• Legitimate Right