7-distribution channel or marketing channel

7/27/2019 7-Distribution Channel or Marketing Channel

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Distr ibution Channel or Marketing

Channel

Set of firms and individuals that taketitle, or assist in transferring title, to the

particular good or service as it moves

from the producer to the consumer.


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Number of Channel Levels

Zero-level Channel

Direct Marketing

One-level Channel Consumer Markets Retailer

Organisational Markets Sales Agent or Broker

Two-level Channels

Consumer Markets - Wholesaler / Retailer Organisational Markets Industrial Distributor /

Dealers

Multiple-levels

Complex


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Physical Flow

Title FlowPayment Flow

Information Flow

Promotion Flow

Channel F lows


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Managing Channel Relationships

Channel Partnering

Channel Conflict

Channel Leadership

Channel Control

Channel Power

SocialDimensionsof Channels


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ChannelPowerA channel members capacity to

control or influence the behavior of

other channel members


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Channel Control

A situation that occurs when one

marketing channel memberintentionally affects another

members behavior


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Channel Leader

A member of a marketing channel

that exercises authority/power overthe activities of other members,

also referred to as the Channel

Captain


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ChannelConflictA clash of goals and methods betweendistribution channel members

Horizontal ConflictOccurs among channel members on the samelevel

Vertical ConflictOccurs among channel members at differentlevels


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ChannelPartneringThe joint effort of all channel members to

create a supply chain that serves

customers and creates a competitiveadvantage.


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Conventional Marketing Systems

Highly fragmented networks in whichloosely aligned manufacturers, wholesalers

and retailers have bargained with eachother at arms length, negotiatedaggressively over teams of sale, andotherwise behaved autonomously.

Each entity seeks to maximise its ownprofits, even at the expense of maximisingthe profits for the system as a whole.

ChannelOrganisation


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Vertical Marketing Systems

Professionally managed and centrallyprogrammed networks, pre-engineered toachieve operating economies andmaximum market impact

ChannelOrganisation


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Customer Characteristics

Product Characteristics

Middlemen Characteristics

Competitive Characteristics

Company CharacteristicsEnvironmental Characteristics

Channel Design Decisions


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Numberof I ntermediar ies

Intensive Distribution

Exclusive Distribution

Selective Distribution


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Price Policy

Conditions of SaleTerritorial Rights

Mutual Services & Responsibilities

Terms & Responsibil i ties of I ntermediaries


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Motivating the Channel Members

Co-operation

Partnership

Distribution Programming


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Physical Distr ibution or Logistics

The planning, implementation, and control of the

flow of materials and final goods from points of

origin to points of use to meet the needs of

customers at a profit.

Objective of Physical Distr ibution

Getting the right goods to the right places at the

right time for the least cost.


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Order Processing

WarehousingInventoryTransportation

Physical Distr ibution Decisions


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All activities involved in selling goods

and services to those buying for resale

or business use.

Wholesaling


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Retailing

All business activities involved with

the sale of goods and services to

the final consumer for personal,family or household use.


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Target Market Decisions

Product Assortment, Services &Atmospherics Decision

Price Decision

Promotion Decision

Place Decision

Wholesaler & Retai ler Marketing Decisions


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Merchant Wholesaler

An institution that buys goods from

manufacturers, takes title to goods, storesthem, and resells and ships them.

Agents and Brokers

Wholesaling intermediaries who facilitatethe sale of a product by representing

channel member.

Wholesaler Types


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MerchantWholesaler

Independently OwnedBusiness that Takes

Title to the

Merchandiseit Handles.

ManufacturersSales Branches

and Offices

Wholesaling by Sellersor Buyers ThemselvesRather Than Through

Independent

Wholesalers.

Brokers/ AgentsThey Dont Take Title to

the Goods, and TheyPerform Only a Few

Functions.

Types ofWholesalers


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Wholesalers Functions

Selling and

promoting

Buying and

assortment

building

Bulk breaking

Warehousing

Transportation

Financing

Risk bearing

Market

information


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Different Ways to Classify Retail

Outlets

Amount of Service

Product Line Sold

Relative Price Emphasis

Nature of Business Premises

Control of OutletsType of Store Cluster


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Wheel of Retail ing

The lifecycle of retailers, movingfrom an entry position with low

prices to gain market share toeventually moving upscale with

higher-quality products aimed at

more affluent consumers.


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Passage

of timeAs time passes,

outlet adds

services

With time, outlet addsstill more services

4. New form of outlet

enters retailing

environment with

characteristics of

outlet in Box 1

1. Outlet starts with:

Low prices

Low margins

Low status

3. Outlet now has:

Still higher prices

Still higher margins

Still higher status

2. Outlet now has:

Higher prices

Higher margins

Higher status

The Wheel of Retai l ing

7-distribution channel or marketing channel

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