Marketing Channels and Supply Chain

Management

1
Marketing Channels

Explain what a marketing

channel is and why
intermediaries are needed.

2
Marketing Channels

A set of
interdependent organizations
that ease the transfer of
ownership as products move
from producer to business
user or consumer.

3
Marketing Channel Functions

Specialization and division of labor

Overcoming discrepancies

Providing contact efficiency

4
Specialization and Division of Labor

▪ Creates greater efficiency

▪ Provides lower costs
▪ Achieves economies of scale
▪ Aids producers who lack resources to
market directly
▪ Builds good relationships with customers

5
 Overcoming Discrepancies

The difference between the

Discrepancy
amount of product produced
of
and the amount an end user
Quantity
wants to buy.

The lack of all the items a

Discrepancy
customer needs to receive full
of
satisfaction from a product or
Assortment
products.

6
 Overcoming Discrepancies

A situation that occurs when a

Temporal
product is produced but a
Discrepancy
customer is not ready to buy it.

The difference between the

Spatial location of a producer and the
Discrepancy location of widely
scattered markets.

7
Providing Contact Efficiency

8
 Review Learning Outcome
Marketing Channels
Marketing
Channel

Providing Specialization
and Division of Labor

Overcoming
Discrepancies

Providing Contact
Efficiency
Supply
Chain
9
Channel Intermediaries

Define the types of channel

intermediaries and describe
their functions and activities.

10
 Channel Intermediaries

A channel intermediary that

Retailer
sells mainly to customers.

An institution that buys goods

Merchant from manufacturers, takes title
Wholesaler to goods, stores them,
and resells and ships them.

Wholesaling intermediaries who

facilitate the sale of a product from
Agents and
producer to end user by representing
Brokers retailers, wholesalers, or
manufacturers.

11
 Channel Intermediaries

Retailers Take Title to Goods

Merchant
Wholesalers Take Title to Goods

Agents
and Do NOT Take Title to Goods
Brokers

12
 Factors Suggesting Type of
Wholesaling Intermediary to Use

Product characteristics

Buyer considerations

Market characteristics

13
 Channel Functions Performed
by Intermediaries
Contacting/Promotion
Transactional
Negotiating
Functions
Risk Taking

Physically distributing
Logistical Storing
Functions
Sorting

Facilitating Researching
Functions Financing
14
 Logistics

The efficient and cost-effective

forward and reverse flow as
well as storage of goods, services, and
related information, into, through, and
out of channel member companies.

15
 Review Learning Outcome
Channel Intermediaries and Functions

CHANNEL CHANNEL
INTERMEDIARIES FUNCTIONS

Perform
Retailers Transactional
Wholesalers Logistical
Agents and Brokers Facilitating

16
Channels for Consumer Products

Direct Channel - A distribution

channel in which producers
sell directly to consumers.

17
Channel Structures

Describe the channel

structures for consumer
and business products
and discuss alternative
channel arrangements.

18
Channels for Consumer Products

Direct Retailer Wholesaler Agent/Broker

Channel Channel Channel Channel
Producer Producer Producer Producer

Agents or
Brokers

Wholesalers Wholesalers

Retailers Retailers Retailers

Consumers Consumers Consumers Consumers

19
 Channels for Business Products

Direct Direct Industrial Agent/Broker Agent/Broker

Channel Channel Distributor Channel Industrial
Channel
Producer Producer Producer Producer Producer

Agents or Agents or
Brokers Brokers

Industrial Industrial
Distributor Distributor

Industrial Govt. Industrial Industrial Industrial

User Buyer User User User

20
Business Exchanges on the Internet

Agents link buyers and sellers

Companies drop the intermediary from

the supply chain

“Private exchanges” with select suppliers

automate the supply chain

21
Alternative Channel Arrangements

Multiple channels

Nontraditional channels

Strategic channel alliances

22
 Review Learning Outcome
Channel Structures

CONSUMER BUSINESS ALTERNATIVE

CHANNELS CHANNELS CHANNELS

▪Direct ▪Direct ▪Multiple

▪Retail ▪Industrial ▪Nontraditional
▪Wholesaler ▪Agent/broker ▪Strategic
▪Agent/broker ▪Agent/broker alliances
industrial

23
Making Channel Strategy Decisions

Discuss the issues that

influence channel strategy.

24
Channel Strategy Decisions

Factors
Level of
Affecting
Distribution
Channel
Intensity
Choice

Market Factors Intensive Distribution

Product Factors Selective Distribution
Producer Factors Exclusive Distribution

25
 Market Factors

Customer profiles

Consumer or Industrial
Customer

Market Size of market

Factors
That Affect
Channel
Choices Geographic location

26
 Product Factors

Product Complexity

Product Price

Product Standardization

Product Product Life Cycle

Factors
That Affect
Channel Product Delicacy
Choices

27
 Producer Factors

Producer Resources

Number of Product Lines

Producer
Factors
That Affect
Channel Desire for Channel Control
Choices

28
Levels of Distribution Intensity

A form of distribution aimed at

Intensive having a product available
in every outlet

A form of distribution achieved

Selective by screening dealers to eliminate
all but a few in any single area

A form of distribution that

established one or a few
Exclusive dealers within a given area

29
Levels of Distribution Intensity
Intensity Number of
Objective
Level Intermediaries

Achieve mass market

Intensive selling. Many
Convenience goods.

Work with selected

intermediaries.
Selective Shopping and some
Several
specialty goods.

Work with single

intermediary. Specialty
Exclusive goods and industrial
One
equipment.

30
Review Learning Outcome
Issues Influencing Channel Strategy

31
 Transportation

Airways

Water

Pipelines

Motor Carriers

Railroads

32
Transportation Mode Choice

▪ Cost
▪ Transit time
▪ Reliability
▪ Capability
▪ Accessibility
▪ Traceability

33
 Criteria for Ranking
Modes of Transportation
Highest Lowest

Relative Air Truck Rail Pipe Water

Cost
Transit Water Rail Pipe Truck Air
Time

Reliability Pipe Truck Rail Air Water

Capability Water Rail Truck Air Pipe

Accessibility Truck Rail Air Water Pipe

Traceability Air Truck Rail Water Pipe

34
Managing Channel Relationships

Explain channel leadership,

conflicts, and partnering.

35
Managing Channel Relationships

Power

Control

Leadership

Conflict

Partnering

36
Channel Power, Control, and Leadership
The capacity of a particular
Channel marketing channel member to
Power control or influence the behavior
of other channel members

A situation that occurs when

Channel one marketing channel member
Control intentionally affects another
member’s behavior

A member of a marketing
Channel
channel that exercises
Leader
authority/power over the
(channel captain)
activities of other members

37
Channel Conflict and Partnering
Channel Conflict – A clash of

goals and methods between

distribution channel members.

Channel Partnering (Channel Cooperation) –

The joint effort of all channel

members to create a supply

chain that serves customers and

creates a competitive advantage.

38
 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

39
 Review Learning Outcome
Channel Leadership, Conflict, and Partnering

Channel Power, Channel

Control, Leadership Partnering

Channel
Relationship
Synergy

Channel Conflict

Horizontal Vertical

40
Channels and Distribution Decisions
for Services

Identify the special problems

and opportunities
associated with distribution
in service organizations

41
Channels and Distribution Decisions
for Services

Minimizing wait times

Managing service capacity

Improving service delivery

42
 Review Learning Outcome
Channels and Distribution Decisions for Services

43