Marketing Channel Introduction

Marketing Channel Introduction

Definition: a marketing channel is viewed as an interorganizational system involved with making goods, services, and concepts available for consumption by enhancing their time, place, and possession utilities. The essence of this course is how institutions can transmit items of value from points of conception, extraction, and/or production to points of consumption.
2

Marketing Channel Introduction

Part of every product and service purchased Complexity continuum from highly complicated to simple Different groups work together, sometimes unknowingly, to deliver products and services Channel Examples?
3

Marketing Channel Introduction

Channel management ongoing process Evaluation why is evaluation important? How is a channel evaluated?
Is there a formula? Can all channels be evaluated the same way? Is goodwill important?
4

Marketing Channel Introduction

Analyzing the previous channel:
A wholesaler could clean up on economies of scale that the manufacturers are ignoring ORthe manufacturers could strive to reduce their costs of distribution by working together in the channel

Marketing Channel Introduction

Why channels/why change? Demand side
Facilitation of Search Assortment

Supply side
Routinizing transactions Reducing contact points
6

Marketing Channel Introduction

Demand Side:

Facilitation of Search: uncertainty on

the part of buyers and sellers Assortment Discrepancy: difference between the assortment of goods and services desired by the end user and the assortment of goods and services provided
7

Marketing Channel Introduction

Assortment Discrepancy Sorting Out Accumulation Allocation Assorting

Marketing Channel Introduction

Supply Side

Routinization of Transactions: each transaction

i.e. EDI, CRP Inventory Turnover = COGS/Inventory (average)

involves ordering, valuating, and payment. Must be agreement on amount, mode, and timing of payment

Reduction in number of Contacts: Without channel

intermediaries, every buyer would have to interact directly with every seller, or at lease every seller with whom interaction was required

Contact Complexity with/without Intermediaries

Manufacturers Selling Directly 40 Contact Lines Retailers

Manufacturers Selling Through One Wholesaler Wholesaler Retailers 14 Contact Lines

Manufacturers Selling Through Two Wholesalers Wholesalers 28 Contact Lines Retailers

10

Marketing Channel Introduction

The work of the channel Flows, not activities Reason? The whole point of the channel is to move product and services.

11

Marketing Channel Introduction

Consider: SCA Tissue participation in more than one channel Svenska Cellulosa Aktiebolaget, SCA (formerly Wisconsin Tissue Mills) Hygiene Products; tissue products, incontinence care products, baby diapers and feminine hygiene products. Packaging; corrugated board, containerboard, customized protective and specialty packaging. Forest Products; publication papers, pulp, timber and solid-wood products.
12

Performance of Marketing Flows

Physical Possession Ownership Promotion Negotiation Producers Financing Risking Ordering Payment Wholesalers Financing Risking Ordering Payment Physical Possession Ownership Promotion Negotiation Retailers Financing Risking Ordering Payment Physical Possession Ownership Promotion Negotiation Consumers Industrial and Household

13

Marketing Channel Introduction

Performance of flows is correlated to other flows Concept: members of the channel can be shifted/changed/eliminated, however the flows that they represent cannot.

14

Marketing Channel Introduction

Manufacturers:
Branded production
Ford example in textbook (12) is a Ford still only/exclusively a Ford?

Production contracted out

i.e. Packard Company, 1940

Selling under a variety of names

Jeans

Product package
i.e. Mutual Funds
15

Marketing Channel Introduction

Intermediaries between the manufacturer and the end user
Wholesale
Walkers Auto Body Supply

Retail
Staples

Specialized
CIT Financial large client financial services
16

Marketing Channel Introduction

End Users In consuming products & services, we often perform channel flows Possession, ownership, risking, etc

17

Marketing Channel Introduction

Analyzing the channel There is no one right way to design a marketing channel
Without a reference or framework, we overlook important aspects of the channel and design it poorly or in a cost-ineffective manner

18

Marketing Channel Introduction

Questions for Group Discussion TB pg. 17 #1,2,3,4,5 10 minutes. In groups of 4, select 1 question, discuss, take point notes, and be prepared to present your answers. Be sure to include all group members names
Volunteer needed to:
1 take attendance 2 collect all point notes to enter & email to me so that I can make them available on the website.
19