Transcript Chapter 13 Marketing Channel

13
Marketing Channel
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Learning Outcomes
LO 1 Explain what a marketing channel is and why intermediaries
are needed
LO 2 Define the types of channel intermediaries and describe their
functions and activities
LO 3 Describe the channel structures for consumer and business
products and discuss alternative channel arrangements
LO 4 Discuss the issues that influence channel strategy
Learning Outcomes
LO 5 Describe the different channel relationship types and their
unique costs and benefits
LO 6 Explain channel leadership, conflict, and partnering
LO 7 Discuss channels and distribution decisions in global
markets
LO 8 Identify the special problems and opportunities associated
with distribution in service organizations
Marketing Channels
Explain what a
marketing channel is
and why intermediaries
are needed
Marketing Channels
A Marketing Channel is…
a set of interdependent organizations
that eases the transfer of ownership
as products move from producer to
business user or consumer.
Marketing Channel Functions
Specialization and division of labor
Overcoming discrepancies
Providing contact efficiency
LO1
Specialization and
Division of Labor
 Creates greater efficiency
 Provides lower production costs
 Achieves economies of scale
 Aids producers who lack
resources to market directly
 Builds good relationships with
customers
Overcoming Discrepancies
Discrepancy
of
Quantity
The difference between the
amount of product produced
and the amount an end user
wants to buy.
Discrepancy
of
Assortment
The lack of all the items a
customer needs to receive full
satisfaction from a product or
products.
Overcoming Discrepancies
Temporal
Discrepancy
A situation that occurs when a
product is produced but a
customer is not ready to buy it.
Spatial
Discrepancy
The difference between the
location of a producer and the
location of widely
scattered markets.
Exhibit 13.1
How Marketing Channels Reduce the
Number of Required Transactions
Channel Intermediaries and
Their Functions
Define the types of
channel intermediaries
and describe their
functions and activities
Channel Intermediaries
Retailer
A channel intermediary that
sells mainly to customers.
Merchant
Wholesaler
An institution that buys goods
from manufacturers, takes title
to goods, stores them,
and resells and ships them.
Agents and
Brokers
Wholesaling intermediaries who
facilitate the sale of a product by
representing channel members.
Channel Intermediaries
LO2
Retailers
Take Title to Goods
Merchant
Wholesalers
Take Title to Goods
Agents
and
Brokers
Do NOT Take Title to Goods
Factors Suggesting Type of
Wholesaling Intermediary to Use
Product characteristics
Buyer considerations
Market characteristics
LO2
Factors Suggesting Type of
Wholesaling Intermediary to Use
Factor
Merchant
Wholesalers
Agents/ Brokers
Nature of product
Standard
Nonstandard,
custom
Complexity of product
Simple
Complex
Product’s gross margin
High
Low
Frequency of ordering
Frequent
Infrequent
Time between order and
receipt of shipment
Shorter lead
time
Longer lead
time
Number of buyers
Many
Few
Concentration of buyers
Dispersed
Concentrated
Channel Functions
Performed by Intermediaries
Contacting/Promotion
Transactional
Functions
Negotiating
Risk Taking
Physically distributing
Logistical
Functions
Storing
Sorting
Facilitating
Functions
Researching
Financing
Logistics
Logistics
The efficient and costeffective forward and
reverse flow and storage of
goods, services, and related
information, into through,
and out of channel member
companies.
Channel Intermediaries and
Functions
CHANNEL
INTERMEDIARIES
CHANNEL
FUNCTIONS
Perform
Retailers
Transactional
Wholesalers
Logistical
Agents and Brokers
Facilitating
Channel Structures
Describe the channel
structures for
consumer and
business products
and discuss
alternative channel
arrangements
Exhibit 13.3
Marketing Channels for Consumer
Products
LO3
Channels for Consumer
Products
© AP Photo/Matt Slocum
Direct
Channel
A distribution channel in
which producers sell
directly to consumers.
Exhibit 13.4
Channels for Business
and Industrial Products
Business-to-Business
Exchanges on the Internet
The Internet has forced traditional
distributors to expand their model.
Companies drop the intermediary
from the supply chain
“Private exchanges” with select
suppliers automate the supply chain
Alternative Channel
Arrangements
Multiple channels
Nontraditional channels
Strategic channel alliances
Making Channel
Strategy Decisions
Discuss the issues
that influence
channel strategy
Channel Strategy
Decisions
Factors
Affecting
Channel
Choice
Level of
Distribution
Intensity
Market Factors
Intensive Distribution
Product Factors
Selective Distribution
Producer Factors
Exclusive Distribution
Market Factors
Customer profiles
Consumer or Industrial
Customer
Market
Factors
That Affect
Channel
Choices
Size of market
Geographic location
Product Factors
Product Complexity
Product Price
Product Standardization
Product
Factors
That Affect
Channel
Choices
Product Life Cycle
Product Delicacy
Producer Factors
Producer Resources
Number of Product Lines
Producer
Factors
That Affect
Channel
Choices
Desire for Channel Control
Levels of Distribution
Intensity
Intensive
A form of distribution aimed at
having a product available in
every outlet
Selective
A form of distribution achieved
by screening dealers to eliminate
all but a few in any single area
Exclusive
A form of distribution that
established one or a few
dealers within a given area
Levels of
Distribution Intensity
Intensity
Level
Objective
Number of
Intermediaries
Intensive
Achieve mass market
selling.
Convenience goods.
Many
Selective
Work with selected
intermediaries.
Shopping and some
specialty goods.
Several
Exclusive
Work with single
intermediary. Specialty
goods and industrial
equipment.
One
Types of Channel Relationships
Describe the
different channel
relationship types
and their unique
costs and benefits
Types of Channel
Relationships
Benefits
Hazards
Arm’s Length
Relationship
Fulfills a one time or
unique need; low
involvement/risk
Parties unable to
develop relationship;
low trust level
Cooperative
Relationship
Formal contract
without capital
investment/long-term
commitment; “happy
medium”
Some parties may
need more
relationship
definition
Integrated
Relationship
Closely bonded
relationship;
explicitly defined
relationships
High capital
investment; any
failure could affect
every channel
member
Managing Channel
Relationships
Explain channel
leadership, conflict,
and partnering
Social Dimensions of
Channels
Power
Control
Leadership
Conflict
Partnering
Channel Power, Control,
and Leadership
Channel
Power
A channel member’s capacity to control or
influence the behavior of other channel members
Channel
Control
A situation that occurs when one marketing
channel member intentionally affects another
member’s behavior
Channel
Leader
A member of a marketing channel that exercises
authority/power over the activities of other members
Channel Conflict
Channel
Conflict
A clash of goals and methods
between distribution channel
members
Channel Conflict
Conflicts may occur if channel members:

Have conflicting goals

Fail to fulfill expectations of other channel
members

Have ideological differences

Have different perceptions of reality
Channel Partnering
Channel Partnering (Channel
Cooperation) is…
the joint effort of all channel members to
create a channel that serves
customers and creates a competitive
advantage.
By COOPERATING, channel members can
speed up inventory replenishment, improve
customer service, and reduce the total costs of
the marketing channel.
Channels and Distribution
Decisions for Global Markets
Discuss channels
and
distribution decisions
in global markets
Channels and Distribution
Decisions for Global Markets
Channel structure
and type differ
Global Channel
Development
Gray marketing channels
Distribute directly or through foreign partners
Channels and Distribution
Decisions for Services
Identify the special
problems and
opportunities associated
with distribution in
service organizations
Distribution in Service
Organizations
Beyond the Book
Chapter 13 Videos
Sephora – Marketing Channels
Discuss Sephora’s marketing channel for
consumer products.
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