Transcript Chapter 14
Marketing Chapter 14 Managing Distribution Channels Gilbert A. Churchill, Jr. J. Paul Peter Slide 14-1 Channel of Distribution Source Definition Lamb, Hair, A set of interdependent organizations that facilitate and McDaniel the transfer of ownership as products move from producer to business user or consumer Pelton, Strutton, and Lumpkin An array of exchange relationships that create customer value in the acquisition, consumption, and disposition of products and services An organized network (system) of agencies and Churchill and institutions that perform all the functions required to Peter link producers with end users to accomplish the marketing task Slide 14-2 Figure 14.1 How Intermediaries Improve Channel Efficiency Sales Contacts without an Intermediary Sales Contacts with an Intermediary Bike Shop Intermediary Manufacturers of Bicycle Helmets Bike Riders Manufacturers of Bicycle Helmets Bike Riders Slide 14-3 Essential Channel Functions Transactional Functions Contacting and Promoting Negotiating Risk Taking Logistical Functions Physical Distribution Sorting Sorting out Accumulation Allocation Assorting Facilitating Functions Research Financing Slide 14-4 Figure 14.2 Common Channels for Consumer Goods Direct Channel Consumer Producer Indirect Channels Retailers Consumer Wholesalers Retailers Consumer Wholesalers Retailers Consumer Producer Producer Producer Agents Slide 14-5 Common Channels for Consumer Goods - Examples Corky’s Bar-B-Q Consumer Safeway Consumer Interstate Beverage Corporation Soft Drink Retailers Consumer Wholesale Florists Retail Florists Consumer Frito Lay Snapple Small Houseplant Grower Willow Rum Slide 14-6 Figure 14.3 Common Channels for Organizational Goods Direct Channel Organizational buyer Producer Indirect Channels Producer Distributors Producer Organizational buyer Agents Producer Agents Organizational buyer Distributors Organizational buyer Slide 14-7 Alternative Channel of Distribution Type Definition Example Multiple/dual channel a manufacturer distributing the same product to target market through two or more channels Penn. tennis Balls, Cdico caller Id equipment Nontraditional channel channels used to differentiate itself from the competition Internet, infomercial Strategic alliance channel using one manufacturer’s already established channel to reach customers Blockbuster and CocaCola Reverse/backward channel products move in the opposite direction to traditional channels Recycling (plastics, batteries), product recalls Slide 14-8 Figure 14.5 Types of Vertical Marketing Systems Vertical Marketing Systems (VMSs) Administered VMSs Corporate VMSs Wholesalers Sponsored Cooperatives Contractual VMSs Retailer Sponsored Cooperatives Franchising Slide 14-9 Three Categories of Contractual Vertical Marketing Systems McDonalds Franchises Retailer Wholesaler Sponsored Sponsored Cooperatives Cooperatives True-Value Hardware Independent Grocers Alliance (IGA) Slide 14-10a Figure 14.6 Factors to Evaluate for Selecting a Distribution Channel Customer Characteristics Product Characteristics Number Geographic Dispersion Channel Preferences Buying Behavior Use of Technology Cost per Unit Pershability Bulkiness Standardization Need for Installation and Maintenance Intermediary Characteristics Availability Willingness to Carry Product Market Serviced Distribution Functions Performed Potential for Conflict and Cooperation Other Product Offerings Financial Condition Strengths and Weaknesses Slide 14-10b Figure 14.6 Factors to Evaluate for Selecting a Distribution Channel Competitor Characteristics Number and Size Distribution Strategies Financial Conditions Sizes of Product Lines, Product Mixes Objectives, Strategies and Budgets Strengths and Weaknesses Environmental Characteristics Economic Conditions Political Issues Laws, Regulations and Ethics Cultural and Social Changes Technological Changes Organization Characteristics Size and Market Share Financial Condition Size of Product Lines, Product Mix Ability to Perform Distribution Functions Objectives, Strategies and Budgets Channel Experience Strengths and Weaknesses Slide 14-11 Table 14.2 Levels of Market Coverage Level Objective Number of Intermediaries in Trading Area Examples Exclusive Work with a single intermediary for a product that requires special resources or positioning; distribute luxury goods effectively. One Electronic Liquid Fillers packaging systems; Rolex watches Selective Work closely with intermediaries who meet certain criteria; distribute shopping goods effectively. Several Bose speakers; Compaq computer systems Intensive Support mass selling; distribute convenience goods effectively. Many Classic Coke; disposable writing pens Slide 14-12 Channel Leadership Information Expert Reward Channel Power Captain Referent Coercive Legitimate Slide 14-13 Table 14.8 Channel Options for Global Markets Domestic Manufacturers Least Control License Foreign Manufacturers Global Markets License Domestic Foreign Exporters Manufacturers Global Markets Global Intermediaries Global Markets Most Control Global Branches Global Markets Global Markets Slide 14-14 Legal, Political and Ethical Issues Exclusive Dealing A restriction imposed by a supplier on a customer forbidding the customer from purchasing some type of product from any other supplier. Closed Sale Territories A producer specifies a geographic area and assigns one intermediary to serve it. Tying Contracts An agreement under which a marketer sells a particular product only if the buyer also purchases another specific product. Full Line Forcing A type of tying arrangement in which an intermediary that wants to carry a particular product must buy the entire line. Gray Market The situation in which foreign distributors sell foreign versions of U.S. products in the United States. Slotting Allowances A fee paid by a manufacturer for space in a retail store.