Professional Documents
Culture Documents
chapter 10
Harcourt, Inc.
Objectives Objectives
s Recognize
the importance of marketing channels and distribution s Understand marketing channels in terms of creating time, place, and possession utilities s Discuss the three dimensions of channel structure
Dr. Rosenbloom
Objectives
s Identify
determinants of channel structure s Describe the five major flows in marketing channels s Identify the six major areas of channel management s Discern the difference between logistics and marketing channels
Dr. Rosenbloom
(a.k.a. distribution channel) - network of organizations that create time, place, and possession utilities for consumers
Dr. Rosenbloom
Dr. Rosenbloom
Three Dimensions
sity n nte I
s vel s le riou t va a
Ty pe s
Dr. Rosenbloom
of in te rm ed ia rie s
Practiced when a manufacturer restricts product distribution to a single retailer in a particular market or just a relatively few retailers Products that are expensive, infrequently purchased, are sought after by consumers (i.e. specialty goods), or which require considerable after-sale servicing are the most likely candidates for exclusive distribution
Dr. Rosenbloom
Selectively distributed bands are available in multiple retail outlets in a particular market s Shopping products, or those that consumers seek out, are sold through selective distribution
s
Dr. Rosenbloom
Used when convenience products are sold through virtually every available retail outlet in a particular market, e.g. soft drinks, candy, gum, cigarettes
Dr. Rosenbloom
structure include:
s s s
Distribution tasks Economics of distribution tasks Management's desire for distribution control
Dr. Rosenbloom
Familial Relationshipstyle
Concentration Equalization Dispersion
Selection process-style
Accumulating Selecting Sorting
Dr. Rosenbloom
s Economics of
distribution tasks
s
Dr. Rosenbloom
Transaction efficiency
Mfg. A Mfg. B Mfg. C
Without intermediaries
Dr. Rosenbloom
Transaction efficiency
Mfg. A Mfg. B Mfg. C
With intermediaries
Intermediary
Dr. Rosenbloom
control
s
The shorter the channel structure the higher the control Needed when a manufacturer must protect product image, etc.
Dr. Rosenbloom
The movement of the product from manufacturer through all parties who take physical possession Interplay of buying/selling tasks associated with title transfer
Dr. Rosenbloom
s Negotiation Flow
s
Movement of title of the product Information to and from the manufacturer Flow of persuasive communication (advertising, personal selling, etc.) Dr. Rosenbloom
s Information Flow
s
s Promotion Flow
s
Dr. Rosenbloom
The influence one channel member has over other members behaviors Goal impeding behavior by one or more channel members Territorial encroachment
Dr. Rosenbloom
Reward Power Coercive Power Legitimate Power Expert Power Referent Power
Dr. Rosenbloom
Reward Power Coercive Power Legitimate Power Expert Power Referent Power
Dr. Rosenbloom
s s
Threat of punishment (e.g. a manufacturer might threaten a retailer with loss of exclusive distribution)
Reward Power Coercive Power Legitimate Power Expert Power Referent Power
Dr. Rosenbloom
s s
Reward Power Coercive Power Legitimate Power Expert Power Referent Power
Dr. Rosenbloom
s s
Reward Power Coercive Power Legitimate Power Expert Power Referent Power
Dr. Rosenbloom
provides protection from imitation s Distribution strategies can provide sustainable competitive advantage
Market variables Product variables Company variables Intermediary variables Behavioral variables External environment variables
Dr. Rosenbloom
channel
Management Ability
Product Lines
Reputation
Dr. Rosenbloom
Find prospective channel members s Evaluate prospective channel members channel s Convert prospectives into actual channel members
s
Offer support
s s
s s
Retailers (a channel member) play an important role in product positioning Display fixtures Personal selling
s s s
Promotions interface with channel members Point-of-purchase displays Inventory levels Sales person training
customers
s s
Also called physical distribution (PD) Supply chain management (SCM) are logistical systems that facilitate close cooperation among firms in a channel
Dr. Rosenbloom
Use in-house transport or common carriers? s What rates are available? s What are competitors doing?
s
How to minimize distances s What equipment should be used? s How to use labor efficiently
s
How to reduce errors in order processing s How to develop standards for different product types
s
Economic order quantity (EOQ) is the lowest total cost (inventory carry cost + ordering costs)
Where to locate a warehouse s Number of warehousing units and size of units s Ownership question
s
Effective packaging can help control inventory carry costs and help logistics efficiency
Dr. Rosenbloom
Administered VMS
Corporate Systems
Contractual Systems
Conventional channel with one channel member (a manufacturer, wholesaler, or retailer) informally acting as the channel leader.
Dr. Rosenbloom
Administered VMS
Corporate Systems
Contractual Systems
Combines all levels of the marketing channel under one companys ownership
Dr. Rosenbloom
Administered VMS
Corporate Systems
Contractual Systems
Are integrated via contractual agreement s Franchising is the major form of contractual VMS. Others include voluntary chains and cooperatives
s
Dr. Rosenbloom