Marketing Channels and

Supply Chain Management

Zeeshan Khan
zeeshanpmp@gmail.com
zeeshanscm@googlegroups.com

Learning Objectives
1. Explain what a marketing channel is and
why intermediaries are needed.
2. Define the types of channel intermediaries
and describe their functions and activities.

Learning Objective

Explain what a marketing channel

is and why intermediaries are needed.

Marketing Channels

Marketing
Marketing
Channel
Channel

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

Supply
Supply
Chain
Chain

The
The connected
connected chain
chain of
of all
all the
the business
business
entities,
entities, both
both internal
internal and
and external
external to
to the
the
company,
company, that
that perform
perform or
or support
support the
the
logistics
logistics function.
function.

Marketing Channel Functions

Specialization
Specialization and
and
Division
Division of
of Labor
Labor
Channels
Channels
Fulfill
Fulfill
Three
Three
Important
Important
Functions
Functions

Overcoming
Overcoming
Discrepancies
Discrepancies
Providing
Providing Contact
Contact
Efficiency
Efficiency

Marketing Channel Functions

Channels
Channels
Fulfill
Fulfill
Three
Three
Important
Important
Functions
Functions
Providing
Providing Contact
Contact
Efficiency
Efficiency

Marketing Channel Functions

Channels
Channels
Fulfill
Fulfill
Three
Three
Important
Important
Functions
Functions
Providing
Providing Contact
Contact
Efficiency
Efficiency

Marketing Channel Functions

Specialization and
Division of Labor
Provides economies of scale
Aids producers who lack resources to
market directly
Builds good relationships with
customers

Overcoming Discrepancies

Discrepancy
Discrepancy
of
of
Quantity
Quantity

The
The difference
difference between
between the
the amount
amount
of
of product
product produced
produced and
and the
the
amount
amount an
an end
end user
user wants
wants to
to buy.
buy.

Discrepancy
Discrepancy
of
of
Assortment
Assortment

The
The lack
lack of
of all
all the
the items
items required
required to
to
give
give full
full satisfaction
satisfaction from
from aa product
product
or
or products
products to
to the
the customer.
customer.

Overcoming Discrepancies

Temporal
Temporal
Discrepancy
Discrepancy

A
A situation
situation that
that occurs
occurs when
when aa
product
product is
is produced
produced but
but aa
customer
customer is
is not
not ready
ready to
to buy
buy it.
it.

Spatial
Spatial
Discrepancy
Discrepancy

The
The difference
difference between
between the
the
location
location of
of aa producer
producer and
and the
the
location
location of
of widely
widely
scattered
scattered markets.
markets.

Learning Objective
Define the types of channel
intermediaries and describe their
functions and activities.

Channel Intermediaries

Retailer
Retailer

A
A channel
channel intermediary
intermediary that
that
sells
sells mainly
mainly to
to customers.
customers.

Merchant
Merchant
Wholesaler
Wholesaler

An
An institution
institution that
that buys
buys goods
goods
from
from manufacturers,
manufacturers, takes
takes title
title
to
to goods,
goods, stores
stores them,
them,
and
and resells
resells and
and ships
ships them.
them.

Agents
Agents and
and
Brokers
Brokers

Wholesaling
Wholesaling intermediaries
intermediaries who
who
facilitate
facilitate the
the sale
sale of
of aa product
product by
by
representing
representing channel
channel member.
member.

Channel Intermediaries
Retailers
Retailers

Take
Take Title
Title to
to Goods
Goods

Merchant
Merchant
Wholesalers
Wholesalers

Take
Take Title
Title to
to Goods
Goods

Agents
Agents
and
and
Brokers
Brokers

Do
Do NOT
NOT Take
Take Title
Title to
to Goods
Goods

Channel for Consumer Products

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Channel for Business Products

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Channel Functions
Performed by Intermediaries
Transactional
Transactional
Functions
Functions

Logistical
Logistical
Functions
Functions

Facilitating
Facilitating
Function
Function

Contacting/Promotion
Negotiating
Risk Taking
Physically distributing
Storing
Sorting
Researching
Financing

Logistics
The process of strategically
managing the efficient flow
and storage of raw
materials, in-process
inventory, and finished
goods from point of origin
to point of consumption.

Responsibility of Supply Chain Manager

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Supply Chain Process

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Factors Affecting
Transportation Decisions
Carrier (party that moves or transports the
product)
Vehicle-related cost
Fixed operating cost
Trip-related cost

Shipper (party that requires the movement of the

product between two points in the supply chain)
Transportation cost
Inventory cost
Facility cost

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Transportation Modes

Trucks
Rail
Air
Package Carriers
Water
Pipeline

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Air
Key issues:
Location/number of hubs
Location of fleet bases/crew bases
Schedule optimization
Fleet assignment
Crew scheduling
Productivity

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Package Carriers
Companies like FedEx, UPS, that carry small
packages ranging from letters to shipments of
about 150 pounds
Expensive
Rapid and reliable delivery
Small and time-sensitive shipments
Preferred mode for corporate businesses

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Water
Limited to certain geographic areas
Ocean, inland waterway system,
coastal waters
Very large loads at very low cost
Slowest
Dominant in global trade (autos,
grain, apparel, etc.)
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Pipeline
High fixed cost
Primarily for crude petroleum, refined
petroleum products, natural gas
Best for large and predictable
demand
Would be used for getting crude oil to
a port or refinery

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Intermodal
Use of more than one mode of transportation to
move a shipment to its destination
Most common example: rail/truck
Also water/rail/truck or water/truck
Grown considerably with increased use of
containers
Increased global trade has also increased use of
intermodal transportation
Key issue involves the exchange of information to
facilitate transfer between different transport modes

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