DHD2010 MKT243 Fundamental Of Marketing 1

Fundamental Of MarketingMKT243

Chapter 7Marketing Channels

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Slide Outline

Marketing channels Channel intermediaries and their

function Channel Structure Channel strategy decision

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Marketing Channel/ 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

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

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Types of Channel Intermediaries 1. RETAILER

Sell products mainly for final users orConsumer market

2. MERCHANT WHOLESALER

Buy products from Manufacturers, and

Resells to business users(government, wholesaler,

Or retailers)Takes title to product

Or stores

3. AGENT & BROKER

Do not take any title on product.Facilitate selling

Activities for Producers

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Why Channel member are used?

1) Provide specialization and division of labor

2) Overcoming Discrepancies Discrepancy of quantity Temporal discrepancy Spatial discrepancy Discrepancy of assortment

3) Providing contact efficiency

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The Nature and Importance of Marketing Channels

How Channel Members Add Value

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Channel Structure(Consumer Product)

Direct channel Retailer channel Wholesaler Agent/broker

channel channel

Producer

Consumers

Producer

Retailers

Consumers

Producer Producer

Wholesalers

Retailers

Consumers

Agent/ brokers

Wholesalers

Retailers

Consumers

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Channel Structure(Business and Industrial Product)

Direct Channel Direct channel Industrial Agent/broker Agent/ broker- distributor channel industrial distributor

Producer

Industrial User

Producer

Government Buyer

Producer Producer

Industrial distributor

Industrial User

Agents/broker

Industrial user

Producer

Agents/broker

Industrial distributor

Industrial user

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Channel Design Decisions

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Factors Suggesting Type of Wholesaling Intermediary to Use

Product characteristicsProduct characteristics

Buyer considerationsBuyer considerations

Market characteristicsMarket characteristics

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Factor Affecting Channel Choices

1. Market factors-Target customer consideration-Must consider the geographical/ location, market size and level of competition

2. Product factors-Nature of the products characteristics -PLC-Delicacy of the product e.g: Perishable, fragile

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Factor Affecting Channel Choices

3. Producer factors-Producers’ capabilities and performance-Managerial and financial-Marketing resources

MKT243 Fundamental Of Marketing