Transcript Chapter Title

Marketing for Hospitality and Tourism
Kotler, Bowen and Makens
Distribution Channels
Chapter 12
Learning Objectives
1. Describe the nature of distribution channels, and tell
why marketing intermediaries are used.
2. Understand the different marketing intermediaries
available to the hospitality industry and the benefits each
of these intermediaries’ offers.
3. Discuss channel behavior and organization, explaining
corporate, contractual, and vertical marketing
systems, including franchising.
4. Illustrate the channel management decisions of
selecting, motivating, and evaluating channel
members.
5. Identify factors to consider when choosing a business
location.
Marketing for Hospitality and Tourism, 6e
Kotler, Bowen and Makens
© 2014 by Pearson Higher Education, Inc
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Supply Chain
• The Supply Chain consists of Upstream and
Downstream partners
– Upstream partners are firms that supply what is
needed to create a product or service
– Downstream partners connect the firm with its
customers
• A better approach is to think of the supply chain
as a Value Delivery Network where all parties
partner with each to improve the performance of
the entire system
Marketing for Hospitality and Tourism, 6e
Kotler, Bowen and Makens
© 2014 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Distribution Channel Functions
Information
Promotion
Negotiation
Physical
Distribution
Marketing for Hospitality and Tourism, 6e
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Contact
Matching
Financing
Risk Taking
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Major Hospitality Distribution Channels
Hospitality
Distribution
Channels
Marketing for Hospitality and Tourism, 6e
Kotler, Bowen and Makens
© 2014 by Pearson Higher Education, Inc
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Vertical Marketing Systems
Corporate
VMS
Contractual
VMS
Marketing for Hospitality and Tourism, 6e
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Administered
VMS
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Contractual VMS
Franchises
Marketing for Hospitality and Tourism, 6e
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Contractual
VMS
Alliances
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Advantages and Disadvantages
of Franchises
Advantages
Disadvantages
Brand recognition
Fees and royalties are required
Less chance of failure
Limits the products and recipes
Premade ads and marketing plans
Requirements for operating hours
Faster business growth
Required to offer certain products
Help with site selection
A poorly operated company can
negatively affect the reputation of the
entire chain
Architectural plans
Support for operational systems
National contracts with suppliers
Product development
Consulting
Help with financing
Marketing for Hospitality and Tourism, 6e
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Franchisor’s performance affects
franchisees
Some franchisees may benefit more
than others
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Other Management Systems
Horizontal
Marketing
Systems
Marketing for Hospitality and Tourism, 6e
Kotler, Bowen and Makens
Other
Management
Systems
Multichannel
Marketing
Systems
© 2014 by Pearson Higher Education, Inc
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Evaluating Channel Alternatives
Economic
Feasibility of
the Channel
Member
Levels of
Sales
Costs
Marketing for Hospitality and Tourism, 6e
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Control
Criteria
© 2014 by Pearson Higher Education, Inc
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Business Location
Understanding
the Marketing
Strategy &
Target Market
Selecting an
Area Within
that Region
Marketing for Hospitality and Tourism, 6e
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Conducting a
Regional
Analysis
Choosing
Individual Sites
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Key Terms
Administered VMS A vertical
Broker A wholesaler who does not
marketing system that coordinates
successive stages of production and
distribution, not through common
ownership or contractual ties, but
through the size and power of one of
the parties.
take title to goods and whose function
is to bring buyers and sellers together
and assist in negotiations.
Agent A wholesaler who represents
buyers or sellers on a more permanent
basis, performs only a few functions,
and does not take title to goods.
Alliances Alliances are developed to
Channel conflict Disagreement
among marketing channel members on
goals and roles—who should do what
and for what rewards.
Channel level A level of middleman
that performs some work in bringing the
product and its ownership closer to the
final buyer.
allow two organizations to benefit from
each other’s strengths.
Marketing for Hospitality and Tourism, 6e
Kotler, Bowen and Makens
© 2014 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Key Terms (cont.)
Contractual VMS A vertical
Franchise A contractual vertical
marketing system in which independent
firms at different levels of production
and distribution join together through
contracts to obtain more economies or
sales impact than they could achieve
alone.
marketing system in which a channel
member called a franchiser links
several stages in the production
distribution process.
Horizontal conflict Conflict
between firms at the same level.
Corporate VMS A vertical marketing
system that combines successive
stages of production and distribution
under single ownership. Channel
leadership is established through
common ownership.
Direct marketing channel A
Horizontal marketing systems
(HMS) Two or more companies at one
level join to follow new marketing
opportunities. Companies can combine
their capital, production capabilities, or
marketing resources to accomplish
more than one company working alone.
marketing channel that has no
intermediary levels.
Marketing for Hospitality and Tourism, 6e
Kotler, Bowen and Makens
© 2014 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Key Terms (cont.)
Multichannel marketing
Supply Chain Upstream and
Multichannel distribution, as when a
single firm sets up two or more
marketing channels to reach one or
more customer segments.
agency that conducts business through
the Internet with no physical locations
or stores.
downstream partners. Upstream from
the company is a set of firms that
supply raw materials, components,
parts, information, finances, and
expertise needed to create a product.
Downstream marketing channel
partners, such as wholesalers and
retailers form a vital connection
between the firm and its customers.
Retailer Business whose sales come
Vertical conflict Conflict between
primarily from retailing.
different levels of the same channel.
Online Travel Agent (OTA) A travel
Marketing for Hospitality and Tourism, 6e
Kotler, Bowen and Makens
© 2014 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Key Terms (cont.)
Vertical marketing system (VMS)
A distribution channel structure in which
producers, wholesalers, and retailers
act as a unified system: Either one
channel member owns the others, or
has contracts with them, or has so
much power that they all cooperate.
Wholesaler Firms engaged primarily
in wholesaling activity.
Marketing for Hospitality and Tourism, 6e
Kotler, Bowen and Makens
© 2014 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved