Upstream 
is the set of firms that supply the raw
Companies must balance consumer needs not only against the feasibility and costs of meeting these
needs but also against customer price preferences.
Targeted levels of customer service, what segments
to serve, which best channels to use and minimize the
cost of meeting customer service requirements.
The company should identify the different types of
Types of intermediaries.  Conventional distribution channel consists of one or more
channel members that can be involved in the channel.
Intensive distribution means stocking the product in as many outlets as
possible. Producers of convenience products and common raw materials.
Exclusive distribution means giving a limited number of dealers the exclusive
right to distribute the company’s products in their territories: Luxury brands.
The number of marketing intermediaries
Selective distribution involves the use of more than one, but fewer than all,
intermediaries who are willing to carry the company’s products.
The producer and intermediaries need to agree on the
 The responsibilities of the intermediaries.
terms and responsibilities of each channel member. 
The firm should evaluate all of the alternatives using
economic, control and adaptability criteria.
Global marketers must usually adapt their channel
Designing International Distribution Channels
strategies to the existing structures within each country.
Means practicing partner relationship management to build
Managing and Motivating Channel Members
long-term partnerships with other channel members.
The company must regularly check channel member
performance against standards such as sales quotas,
average inventory levels, customer delivery time,...
Exclusive distribution:  the seller allows only
certain outlets to carry its products.
Exclusive dealing: the seller requires that these
dealers not handle competitors’ products.
            Public Policy and Distribution Decisions
Exclusive territorial agreements: The producer may
agree not to sell to other dealers in a given area, or
the buyer may agree to sell only in its own territory.  Goals of the Logistics System
Full-line forcing (tying agreements): Producers sell to
dealers only if the dealers will take some or all of the
rest of its line.
Analyzing Consumer Needs
            Setting Channel Objectives
Identifying Major Alternatives
Evaluating the Major Alternatives
Selecting Channel Members
Evaluating Channel Members
Channel Management Decisions
materials, components, parts, information, finances,
and expertise needed to create a product or service.
Downstream side of the supply chain that look
toward the customer. 
Make-and-sell view, demand view and Value Delivery Network - is
made up of the company, suppliers, distributors, and, ultimately,
customers who “partner” with each other to improve the
performance of the entire system.
Supply Chains and the Value Delivery Network
A marketing channel (or distribution channel)—a set of interdependent organizations
that help make a product or service available for use or consumption by the consumer or
business user.
The Nature and Importance of Marketing Channels
A company’s channel decisions directly affect every other marketing decision.
intermediaries play an important role in matching supply and
demand. Some key functions helping to complete transactions: The number of intermediary levels indicates the length of a channel.
How Channel Members Add Value Number of Channel Levels
Information, Promotion, Contact, Matching, Negotiation, Include: direct marketing channel, indirect marketing channel.
Physical distribution, Financing, Risk taking.
Although channel members depend on one another, they often act alone in their own short-run best interests,
Channel Behavior which results in channel conflict. Horizontal conflict occurs among firms at the same level
of the channel. Vertical conflict, conflict between different levels of the same channel, is even more common.
independent producers, wholesalers, and retailers.
Corporate VMS: integrates successive stages of
Vertical Marketing Systems production and distribution under single ownership.
Channel Design Decisions Contractual VMS: consists of independent firms at different levels of production and The franchise organization is the most common type:
Vertical marketing system (VMS) consists of producers,
distribution that join together through contracts to obtain more economies or sales a channel member (franchisor) links several stages in
wholesalers, and retailers acting as a unified system. 
impact than each could achieve alone. the production-distribution process. 
Channel Behavior and Organization
Administered VMS: leadership is assumed not through common ownership
or contractual ties but through the size and power of one or a few dominant
channel members.
Two or more companies at one level join together to
follow a new marketing opportunity. Companies can
Horizontal Marketing Systems
CHAPTER 12 combine their financial, production, or marketing resources
to accomplish more than any one company could alone.
A distribution system in which a single firm sets up two or more
Multichannel Distribution Systems
marketing channels to reach one or more customer segments.
Disintermediation:  the cutting out of marketing channel intermediaries
Changing Channel Organization by product or service producers or the displacement of traditional
resellers by radical new types of intermediaries.
Marketing logistics, or physical distribution, is the planning, implementing and controlling the physical
flow of materials, final goods and related information from points of origin to points of consumption
to meet customer requirements at a profit. Includes: outbound, inbound, and reverse distribution.
Nature and Importance
of Marketing Logistics
Supply chain management —managing upstream and downstream value-added flows of materials,
final goods, and related information among suppliers, the company, resellers, and final consumers.
Developing a sustainable supply chain is not only
Sustainable Supply Chains
environmentally responsible, it can also be profitable.
The goal of marketing logistics should be to provide
a
targeted level of customer service at the least cost. 
Storage warehouses store goods for
moderate to long periods.
Warehousing
Distributioncenters are large and highly automated warehouses designed to receive goods from various
plants and suppliers, take orders, fill them efficiently, and deliver goods to customers as quickly as possible.
Many companies have greatly reduced their inventories and
related costs through just-in-time logistics systems. 
Inventory management
Marketing Logistics and Supply Chain
Many companies now use some form of RFID or “smart tag” technology.
Management
Major Logistics Functions
Transportation affects the pricing of products, delivery times and the condition
of the goods. Five main transportation modes: truck, rail, water, pipeline, and air
along with an alternative mode for digital products—the internet. 
Transportation
Multimodal transportation means combining two or
more modes of transportation.
Channel partners often link up to share information
and make better joint logistics decisions.
Logistics Information Management
Information can be shared and managed through Electronic Data Interchange
(EDI) - the digital exchange of data between organizations, which primarily is
transmitted via the Internet. 
The logistics concept that emphasises teamwork, both inside the company and among all the
marketing channel organisations, to maximise the performance of the entire distribution system. 
Cross-functional teamwork inside the company means an integrated and harmonized system.
Integrated Logistics Management
Companies should not only improve their logistics, but also their logistic partnerships.
Third-party logistics (3PL) provider is an independent logistics provider that performs any or all
of the functions required to get a client’s product to the market. They often do this at a
lower cost and more efficiently, while the company can focus on its core business.