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Marketing Channels & Distribution
Marketing Channels & Distribution
Marketing Channels & Distribution
Channel Conflict
Horizontal Conflict: conflict among firms at the same level of the channel (e.g., retailer to retailer).
Example: Two retailers compete to carry a suppliers exclusive product.
Vertical Conflict: conflict between different levels of the same channel (e.g., wholesaler to retailer).
Example: Manufacturer competes with retailer in selling product to target market.
Franchise Organizations
Powerful force in U.S. Retail (40%+ of all sales) Franchise Structures Compensation Arrangements Advantages
Brand Name Recognition Standardized Processes and Procedures Avoids startup hassles safer bet Quick access to capital and huge expansion potential
Disadvantages
Over-saturation and territorial issues Marketing fund disputes Quality (vs. Company-owned) Little room for entrepreneurial creativity
Channel Innovations
Horizontal Marketing System
Two or more companies at one channel level join together to achieve a marketing goal.
Joint Ventures Alliances and Partnerships Co-Marketing, Co-Distribution and Co-Branding
Disintermediation
Occurs when producers sidestep intermediaries and sell directly to final buyers, or when radically new types of channel intermediaries displace traditional ones.
The Internet has made the disintermediation of many traditional retailers possible.
Disintermediation Example
Calyx & Corolla sells fresh flowers and plants direct to consumers over the phone and via the Web, drastically reducing the time it takes flowers to reach consumers via conventional retail channels.
Black & Decker chose to avoid disintermediation by not using the Internet to sell their products. Instead B&D directs consumers to stores that carry its products.
Outsourcing Distribution
Company sales force vs. Manufacturers Rep
Company sales force
Employed directly by the firm in outside or inside sales capacity.
Manufacturers agency/representative
Independent firms whose sales people handle several companies products simultaneously
Selective Distribution
Maytag uses selective distribution like many furniture and appliance manufacturers.
The Where to Buy page on their Web site assists buyers in finding stores that carry the Maytag brand.
Marketing Logistics
Definition: The physical flow of goods, services, and related information from points of origin to points of consumption. Includes:
Inbound distribution Outbound distribution Reverse distribution
Inventory Management
Must strike a balance between
too much and too little inventory buffers and shortages carrying costs and ordering/setup costs
RFID technology promises to automate the entire distribution chain, resulting in significant cost savings.
Transportation
Trucks Railroads Ships Pipelines Air Internet Intermodal transportation
Intermodal Transportation
Intermodal transportation combines two or more modes of transportation. Fishyback = water and trucks; Piggyback = trucks and rail; Trainship = water and rail; Airship = air and water.
Third-Party Logistics
Most small and medium size companies outsource transportation to UPS or other logistics providers.