Chapter 15:Chapter 15:Selecting & ManagingSelecting & ManagingMarketing ChannelsMarketing Channels

Chapter 15:Chapter 15:Selecting & ManagingSelecting & ManagingMarketing ChannelsMarketing Channels

Otterbein Otterbein CollegeCollege

Winter 2000Winter 2000

04/18/23 16-2

ObjectivesObjectives

• Work Performed by Marketing Work Performed by Marketing ChannelsChannels

• Channel-Design DecisionsChannel-Design Decisions

• Channel-Management DecisionsChannel-Management Decisions

• Channel DynamicsChannel Dynamics

04/18/23 16-3

How a Distributor Reduces theNumber of Channel Transactions

= Customer= Customer= Manufacturer= Manufacturer

A. Number of contacts A. Number of contacts without a distributorwithout a distributor

M x C = 3 X 3 = 9M x C = 3 X 3 = 9

11

3322

445566

778899

04/18/23 16-4

How a Distributor Reduces theHow a Distributor Reduces theNumber of Channel TransactionsNumber of Channel Transactions

= Distributor= Distributor= Customer= Customer= Manufacturer= Manufacturer

B. Number of contacts B. Number of contacts with a distributorwith a distributorM x C = 3 + 3 = 6M x C = 3 + 3 = 6

Store

11

22

33

44

55

66

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Distribution Channel Functions

OrderingOrdering

PaymentsPayments

CommunicationCommunicationTransferTransfer

NegotiationNegotiation

FinancingFinancingRisk TakingRisk Taking

PhysicalDistribution

PhysicalDistribution

InformationInformation

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Consumer Marketing ChannelsConsumer Marketing Channels

WholesalerWholesaler JobberJobber RetailerRetailer ConsumerConsumer

ConsumerConsumer

RetailerRetailer ConsumerConsumer

Mfr.Mfr.

0-level channel

WholesalerWholesaler RetailerRetailer ConsumerConsumer Mfr.Mfr.

2-level channel

Mfr.Mfr.

3-level channel

1-level channel

Mfr.Mfr.

04/18/23 16-7

Industrialdistributors

Man

ufa

ctu

rer

Co

nsu

mer

Manufacturer’srepresentative

Manufacturer’ssales branch

Industrial Marketing ChannelsIndustrial Marketing Channels

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Customers’ Desired Service LevelsCustomers’ Desired Service Levels

• Lot sizeLot size

• Waiting timeWaiting time

• Spatial convenienceSpatial convenience

• Product varietyProduct variety

• Service backupService backup

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Channel Management DecisionsChannel Management Decisions

SelectingSelecting

FE

ED

BA

CK

MotivatingMotivating

TrainingTraining

EvaluatingEvaluating

04/18/23 16-10

Types of Vertical Marketing SystemsTypes of Vertical Marketing Systems

CorporateCommon Ownership at Different

Levels of the Channel

CorporateCommon Ownership at Different

Levels of the Channel

ContractualContractual Agreement Among

Channel Members

ContractualContractual Agreement Among

Channel Members

AdministeredLeadership is Assumed by One or

a Few Dominant Members

AdministeredLeadership is Assumed by One or

a Few Dominant Members