Transcript Essentials of Marketing, 8th Edition

Chapter 10:
Place and
Development of
Channel Systems
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 2000
Irwin/McGraw-Hill
Chapter 10 Objectives
When you finish this chapter, you should
1. Understand what product
classes suggest about Place
objectives.
2. Understand why some firms
use direct channel systems
while others rely on
intermediaries and indirect
systems.
3. Understand how and why
marketing specialists develop
to make channel systems
more effective.
4. Understand how to develop
cooperative relationships—
and avoid conflicts—in
channel systems.
10-2
5. Know how channel members
in vertical marketing systems
shift and share functions—to
meet customer needs.
6. Understand the differences
between intensive, selective,
and exclusive distribution.
7. Understand the important new
terms.
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 2000
Irwin/McGraw-Hill
Strategy Decision Areas in Place
Place objectives
Customer
service
level desired
Type of
channel
Direct
Degree of market
exposure desired
Indirect
Type of
physical distribution
facilities needed
Middlemen/
facilitators needed
How to manage
channels
Exhibit 10-1
10-3
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 2000
Irwin/McGraw-Hill
Why a Firm May Want to Use Direct Channels
Greater Control
Lower Cost
Value added subsequent to
production process
Direct contact with
Customer Needs
Some
Reasons
for Choosing
Direct Channels
10-4
Quicker Response or
Change in Marketing Mix
Suitable Middlemen Not
Available
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 2000
Irwin/McGraw-Hill
Four Examples of Basic Channels of
Distribution for Consumer Products
Manufacturer or producer
Citibank
Del
Monte
Procter &
Gamble
Wholesaler
Wholesaler
Nissan
Wholesaler
Retailer
Retailer
Retailer
Consumer
Exhibit 10-2
10-5
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 2000
Irwin/McGraw-Hill
Regrouping Activities
Accumulating
Sorting
10-6
BulkBreaking
Assorting
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 2000
Irwin/McGraw-Hill
Managing Channel Relationships
Choosing the Type of
Relationship
Whole-Channel ProductMarket Commitment
Key
Issues in
Channel
Management
Conflict Handling
Common Objectives
Role of Channel Captain
10-7
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 2000
Irwin/McGraw-Hill
Vertical Marketing Systems
Type of channel
Characteristics
Vertical marketing systems
Traditional
Administered
Contractual
Corporate
Little or
none
Some to
good
Fairly good
to good
Complete
Control maintained
by
None
Economic
power and
leadership
Contracts
One
company
ownership
Examples
Typical
“independents”
General
Electric
McDonald’s
Florsheim
Amount of
cooperation
Exhibit 10-3
10-8
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 2000
Irwin/McGraw-Hill
Market Exposure
Intensive
What Market
Exposure
Fits the
Marketing
Objectives
Exclusive
10-9
Selective
= number of
outlets
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 2000
Irwin/McGraw-Hill
Key Terms
Place
Channel of Distribution
Direct Marketing
Discrepancy of Quantity
Discrepancy of Assortment
Regrouping Activities
Accumulating
Bulk-Breaking
Sorting
Assorting
Traditional Channel Systems
Channel Captain
Vertical Marketing Systems
Corporate Systems
Vertical Integration
Administered Systems
Contractual Systems
Ideal Market Exposure
Intensive Distribution
Selective Distribution
Exclusive Distribution
Dual Distribution
Reverse Channels
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 2000
Irwin/McGraw-Hill