Marketing Channels

12

12- 2

How Channel Members Add Value

12- 3

Nature & Importance of Marketing Channels

Key Functions Performed by Channel Members

Information

Promotion

Contact

Matching

Negotiation

Physical Distribution

Financing

Risk taking

12- 4

Consumer Marketing Channels

12- 5

Business Marketing Channels

12- 6

Number of Channel Levels The number of intermediary levels

indicates the length of a marketing channel. Direct Channels Indirect Channels

Producers lose more control and face greater channel complexity as additional channel levels are added.

Nature & Importance of Marketing Channels

12- 7

Nature & Importance of Marketing Channels

Channel Members Are Connected Via A Variety of Flows

Physical Flow

Payment Flow

Information Flow

Promotion Flow

Flow of Ownership

12- 8

Channel Conflict Occurs when channel members

disagree on roles, activities, or rewards.

Types of Conflict: Horizontal conflict: occurs among

firms at the same channel level Vertical conflict: occurs among firms

at different channel levels

Channel Behavior and Organization

12- 9

Conventional Versus Vertical

Marketing System

12- 10

Vertical Marketing Systems Corporate VMS Contractual VMS

Manufacturer-sponsored retailer franchise system

Manufacturer-sponsored wholesaler franchise system

Service-firm-sponsored retailer franchise system

Administered VMS

Channel Behavior and Organization

12- 11

Horizontal Marketing Systems Two or more

companies at one level join together to follow a new marketing opportunity.

Channel Behavior and Organization

Nestle and General Mills work together to market cereal outside of North America

12- 12

Identifying Major Alternatives Number of marketing intermediaries

Intensive distribution Selective distribution Exclusive distribution

Responsibilities of channel members

Channel Design Decisions

Number of intermediaries

Number of Outlets

EXCLUSIVE SELECTIVE INTENSIVE

Few Many

12- 14

Exclusive distribution Only certain outlets are

allowed to carry a firm’s products

Exclusive dealing Exclusive territorial

agreements Tying agreements

Public Policy and Distribution Decisions