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13. Marketing Channels & Supply Chains

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Marketing Channels

• Move products from producers to consumers

• Provide time, place, and possession utilities to customers

• Can be direct (producer to end-use buyer) or indirect (producer to intermediary(ies) to end-use buyer)

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Intermediary Roles

• Perform three basic functions, in which are contained the eight marketing functions:– Transactional function

• Buying, selling

– Logistical function• Transporting and storing

– Facilitating function• Gathering marketing information, standardization

and grading, risk taking, and financing

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Channel Intermediaries

• Middleman• Wholesaler• Retailer• Agent• Broker• Distributor• Dealer• Manufacturer’s branches and offices

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Types of Marketing Channels• Vertical marketing systems (VMSs):

– May involve forward or backward integration• Types of VMS’s

– Corporate– Administered– Contractual: 3 types

• Wholesaler-sponsored voluntary chains• Retailer cooperatives• Franchise organizations: 3 types

– Manufacturer-sponsored retailer franchise

– Manufacturer-sponsored wholesaler franchise

– Service-firm-sponsored retailer franchise

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Types of Marketing Channels (Cont.)

• Horizontal marketing systems– 2+ companies pool resources or programs to exploit

opportunity– Symbiotic marketing

• Electronic marketing channels• Multichannel marketing systems

– Single firm uses 2+ channels to reach different customer segments

• E.g., dual distribution

– Benefits: increased market coverage, lower channel cost, more customized selling

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Channel Design Decisions

• Determine degree of target market coverage needed– Types of intermediaries– Distribution intensity

• Intensive• Selective• Exclusive

– Exclusive dealerships– Closed sales territories– Tying contracts

– Responsibilities of intermediaries

• Set channel objectives & determine constraints– Market, product, company/organization, competition

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Channel Conflict, Cooperation, Competition

• Types of conflict– Vertical channel, horizontal channel, multichannel (esp.

gray market)

• Causes of conflict– Goal incompatibility, unclear roles/rights, perceptual

differences, dependence on manufacturer

• Managing conflict– Adoption of super-ordinate goals, exchange of persons,

co-optation, joint membership in trade associations, diplomacy/mediation/arbitration

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Physical Distribution & Logistics Management

• Supply chain• Logistics management

– Customer service (analyze needs)• Information, convenience, and support

– Order processing– Inventory control

• Technology (esp. ERP & RFID)• Vendor-managed inventory

– Materials handling—unitizing & containerization– Warehousing– Transportation

• Carriers, modes• Goals of logistics management

– Minimize total logistics costs– Create customer value delivery system