The

Marketing
Channel
RUBY-LYN T. DE GRANO
The Marketing Channel
The external contractual organization that management operates to achieve its distribution objectives.

EXTERNAL - marketing channel exists outside the firm

CONTRACTUAL ORGANIZATION- firms or parties who are involved in negotiatory functions as

a product or service moves from the producer to its ultimate user.

OPERATES - involvement by management in the affairs of the channel.

DISTRIBUTION OBJECTIVES - management has certain distribution goals in mind.

Marketing Channel and Marketing
Management Strategy
CHANNEL STRATEGY is concerned with the entire process of setting up and operating the
contractual organization that is responsible for meeting the firm’s distribution objectives

LOGISTICS MANAGEMENT narrowly focused on providing product availability at the appropriate

times and places in the marketing channel.
Marketing Channel Flow
1.Product flow: the movement of the physical product from the manufacturer through all the parties
who take physical possession of the product until it reaches the ultimate consumer

2.Negotiation flow: the institutions that are associated with the actual exchange processes

3.Ownership flow: the movement of title through the channel

4.Information flow: the individuals who participate in the flow of information either up or down the
channel

5.Promotion flow: the flow of persuasive communication in the form of advertising, personal selling,
sales promotion, and public relations
FLOWS IN MARKETING
CHANNEL
Channel Structure
Chapter 2: THE CHANNEL
PARTICIPANTS
1. Producers and Manufacturers
2. Intermediaries
3. Facilitating agencies
 Chapter 3: The Environment of
Marketing Channels
1. ECONOMIC ENVIRONMENT

2. COMPETITIVE ENVIRONMENT
◦ Types of Competition
• Horizontal - competition between firms of the same type
• Intertype - competition between different types of firms at the same channel level
• Vertical - refers to a competition between channel members at different levels in the channel,
• Channel system - refers to complete channels competing with other complete channels
3. SOCIO-CULTURAL ENVIRONMENT
4. TECHNOLOGICAL
5. LEGAL ENVIRONMENT
Chapter 4: Behavioral Process in
Marketing Channel
CONFLICT IN THE MARKETING CHANNEL

Conflict vs competition - In the process of both competition and conflict, the goals of the various units
are perceived to be incompatible, and the units are striving respectively to attain these goals. In this
context, competition occurs where, given incompatible goals, there is no interference with one
another’s attainment
Causes of Channel Conflicts
1. Role Incongruities

2. Resource Scarcities

3. Perceptual Difference

4. Expectational Differences

5. Decision Domain Disagreements

6. Goal Incompatibilities
Effects of Channel Conflict
1. Negative Effect – Reduced Efficiency
2. No Effect – Efficiency Remains Constant
3. Positive Effect – Efficiency Increased
Managing Channel Conflict
1. Detect conflict or potential conflict

2. Appraise the possible effect of the conflict

3. Resolve channel conflict

POWER IN THE MARKETING
CHANNEL
Bases of Power for Channel Control

1. Reward power

2. Coercive power

3. Legitimate power

4. Referent power

5. Expert power
Behavioral Problems in Channel
Communications
1.) differences in goals between manufacturers and their retailers, and

2.) differences in the kinds of language they use to convey information.