Transcript Managing Marketing Channels

Managing
Marketing Channels
Market Intermediaries – Types & Functions
Marketing Channels – Consumer & Industrial Goods
Wholesalers & Retailers
Channel Design Decisions
Channel Management Decisions
Channel Integration & Systems
Terms used for Marketing Intermediaries
Middleman Any intermediary between manufacturer and end-user markets
Agent or
Broker
Wholesaler
Retailer
Distributor
Dealer
Any intermediary with legal authority to act on behalf of the
manufacturer
An intermediary who sells to other intermediaries, usually to
retailers; usually applies to consumer
An intermediary who sells to consumers
An imprecise term, usually used to describe intermediaries
who perform a variety of distribution functions, including
selling, maintaining inventories, extending credit, and so on; a
more common term in business markets but may also be used
to refer to wholesalers
An even more imprecise term that can mean the same as
distributor, retailer, wholesaler, and so forth
Functions performed by Marketing Intermediaries
Transactional
function
Logistical
function
Facilitating
function
Buying
Purchasing products for resale or as an agent for supply of a product
Selling
Contacting potential customers, promoting products & soliciting orders
Risk taking
Assuming business risks in the ownership of inventory that can become
obsolete or deteriorate
Assorting
Creating product assortments from several sources to serve customers
Storing
Assembling & protecting products at convenient location to offer better
customer service
Sorting
Purchasing in large quantities & breaking into smaller amounts desired
by customers
Transporting
Physically moving a product to customers
Financing
Extending credit to customers
Grading
Inspecting, testing or judging products and assigning them quality
grades
Mktg. Info. &
Research
Providing info. to customers and suppliers, including competitive
conditions and trends
Marketing channels for Consumer Goods
Dominos’ Pizza
General Motors
Cadburys
Kellogg's
Agent
Retailer
Consumer
Consumer
Wholesaler
Wholesaler
Retailer
Retailer
Consumer
Consumer
Marketing channels for Industrial Goods
IBM / Airbus
Caterpillar
Stake Fastener
Agent
Industrial
distributor
Industrial
user
Industrial
user
Harkman Electric
Agent
Industrial
distributor
Industrial
user
Industrial
user
Channel Intermediaries - Wholesalers
Does wholesaler own the products?
No (agent middlemen)
Yes (merchant wholesalers)
Agent middlemen
How many functions the wholesaler provide?
Auction companies
Some functions
Brokers
Manufacturers’ agents
Selling agents
All functions
Limited-function Merchant Wholesaler
Cash-and-carry wholesaler
Service Merchant Wholesaler
General merchandise wholesaler
Single-line or general-line wholesalers
Specialty wholesalers
Drop-shippers
Truck wholesalers
Rack Jobbers
Catalog wholesalers
Merchant Wholesalers
Service
Merchant
Wholesaler
Limitedfunction
Merchant
Wholesaler
General
merchandise
wholesaler
Carry a wide variety of nonperishable items such as
hardware, electrical supplies, furniture, drugs, cosmetics and
automobile equipments
Single-line
wholesaler
Carry a narrower line than general w/salers, might be only
food, apparel, certain types of industrial tools or supplies
Specialty
wholesaler
Carry a very narrow range of products and offer more info. &
service than other w/salers, e.g. only health foods
Cash-and-carry
wholesaler
Operate like service w/salers except customers must pay
cash
Drop shippers
Take the title but do not handle, stock or deliver, involved in
selling, get orders and pass on to producers
Truck
wholesalers
Specialize in delivering products stocked in their own trucks
Rack Jobbers
Specialize in hard-to-handle assortments of products that a
retailer doesn’t want to manage – usually display the
products on their own wire racks
Catalog
Wholesalers
Sell out of catalogs that may be distributed widely to smaller
industrial customers or retailers
Features of Retailer’s offering
• Convenience – available hours, finding needed products, fast checkout,
location, parking
• Product selection – width and depth of assortment, quality
• Special services – special orders, home delivery, gift wrap,
entertainment
• Fairness in dealings – honesty, correcting problems, return privileges,
purchase risks
• Helpful information – courteous sales help, displays, demonstrations,
product information
• Social image – status, prestige, “fitting in” with other shoppers
• Shopping atmosphere – comfort, safety, excitement, relaxation, smell,
sounds
Retailers and their Nature of Offerings
Expanded assortment
and service
Conventional
offerings
Single- & limitedline stores
Expanded assortment
and/or reduced
margins and service
Specialty shops and
department stores
Supermarkets, superstores,
discount houses,
mass-merchandisers,
Added convenience and Telephone and mail order,
higher than conventional vending machines, door to
margins, usually
door, convenience stores,
reduced assortment
some electronic retailing
Expanded assortment,
reduced margins and
more information
Internet
Major Store Retailer Types
Specialty
Stores
Carry a narrow product line with a deep assortment of
products within that line
Style & Chirag Din
in Mumbai
Department
Stores
Carries several product lines, invariably all that is
required by a typical household
Pantaloon,
Westside, etc.
Supermarkets
Large, low-cost, low-margin, high volume, self-service
operation designed to serve the customer’s need for
food, laundry and household maintenance products
Foodland &
Garware’s in
Mumbai
Convenience
Stores
Relatively small stores located near residential areas,
carry limited line of high-turnover convenience products
Street corner
grocery store
Discount
Stores
Sell standard merchandise at lower prices, by accepting
lower margins, but pushing for higher sales volume
Big Bazar
Off-Price
Retailer
Sell merchandise bought at less-than-regular wholesale
prices and sold at less than retail
Bata
Superstores
Very large stores traditionally aimed at meeting
consumers’ total needs for routinely purchased food and
nonfood items
Wal-Mart
Marketing Channels Across PLC
High
Market
Growth
Rate
Low
Growth
Dedicated stores:
Computer Stores,
Shopper’s Stop
Department stores like
Akbarallys
Introductory
Specialist channels like
boutiques in
fashion/designer wear
Decline
Discount stores
Low cost alternatives like
“Discount Sales”
High
Mature
Value Added by Channel Members
Low
Summary of the alternative Channels of
Distribution available to a Manufacturer
Door-to-door sales
Department stores
Convenience
Freecourt retailing
Chemists
Discounters
Direct
delivery to
customers
Retailing
related
Monetary services
Theme parks
Universities
Hospitals
Institutional
Educational
Vending
Interactive Kiosks
CD ROMs
TV channels
Virtual stores
Online services
Internet
New
Channels
Direct
Mktg.
Railway station
Underground
Airports
Sports centers
Loyalty schemes
Sales promotion
Channel Design Decisions
• Analyzing Customers’ Desired Service Output Levels
- Lot Size
- Waiting and Delivery Time
- Spatial Convenience
- Product Variety
- Service backup
• Establishing objectives and constraints
• Identifying Major Channel Alternatives
- Types of intermediaries
- Number of Intermediaries
- Terms and Responsibilities of Channel Members
• Evaluating the Major Alternatives
- Economic Criteria
- Control and Adaptive Criteria
Channel Management Decisions
•
•
•
•
•
Selecting Channel Members
Training Channel Members
Motivating Channel Members
Evaluating Channel Members
Modifying Channel Arrangements
Channel Integration and Systems
Vertical Marketing Systems
Corporate VMS
Contractual VMS
Administered VMS
Horizontal Marketing Systems
(Two or more unrelated companies put together resources or
programs to exploit an emerging marketing opportunity)
Multichannel Marketing Systems
(Single firm uses two or more marketing channels to reach one
or more customer segments)
Comparison between
Conventional Channel Structure and VMS
Conventional Marketing Channel
Members
Functions
Manufacturer
Design, Make, Brand,
Price, Promote
Wholesaler
Buy, Stock, Promote, Display,
Sell, Deliver, Finance
Retailer
Buy, Stock, Promote, Display,
Sell, Deliver, Finance
Consumer
Vertical Marketing System
Members
Functions
Manufacturer
Wholesaler
Retailer
Consumer
Design
Make
Brand
Price
Promote
Buy
Stock
Display
Sell
Deliver
Finance
Vertical Marketing Systems
Vertical
Marketing System
Corporate Vertical
Marketing System
(Polo/Ralph Lauren)
Wholesalersponsored
voluntary chains
Manufacturersponsored retail
franchise system
(Ford)
Contractual Vertical
Marketing System
Franchise program
Manufacturersponsored
wholesaler franchise
system (Coca Cola)
Administered Vertical
Marketing System
(Procter & Gamble)
Retailer-sponsored
cooperatives
Service-sponsored
retail franchise
system
(McDonald’s)
Servicesponsored
franchise system
(H&R Block)
Channel Conflict
Types
Vertical Channel Conflict
Horizontal Channel Conflict
Multichannel Conflict
Causes
Goal Incompatibility
Difference in perceptions
Unclear roles & rights
Dependence on the manufacturer
Managing Channel Conflict
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Adoption of super ordinate goals – survival, market share, high quality, etc.
Exchange of persons between two or more channel levels
Co-option – Effort by an organization to win the support of the leaders of other
organization by including them in advisory councils
For acute or chronic conflicts, parties may resort to diplomacy, mediation or
arbitration
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Class