Chapter 10: Marketing Channels (Place)

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
Value Delivery Network
a network composed of the company, suppliers, distributors, and, ultimately, customers who partner to help the entire system deliver better customer value
Information
Promotion
Contact
Matching
Negotiation
Key functions of marketing channels
Information
Gathering and distributing information about consumers, producers, and other actors and forces in the marketing environment needed for planning and aiding exchange
Promotion
Developing and spreading persuasive communications about an offer
Contact
Finding and communicating with prospective buyers
Matching
shaping offers to meet the buyer’s needs, including activities such as manufacturing, grading, assembling and packaging
Negotiation
reaching an agreement on price and other terms so that ownership or possession can be transferred
Physical Distribution
transporting and storing goods
Financing
acquiring and using funds to cover the costs of channel work
Risk Taking
assuming the risks of carrying out the channel work
Channel Level
a layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer
Direct Marketing Channel
a marketing channel that has no intermediary levels
Indirect Marketing Channel
a marketing channel containing one or more intermediary levels
Channel Conflict
disagreements among marketing channel members on goals , roles, and rewards—who should do what and for what rewards
Horizontal Conflict
occurs among firms at the same level of the channel
Vertical Conflict
conflicts between different levels of the same channel, more common
Conventional Distribution Center
A channel consisting of one or more independent producers, wholesalers, and retailers, each separate business seeking to maximize its own profits, perhaps even at the expense of profits for the system as a whole
Vertical Marketing System
A channel structure in which producers, wholesalers, and retailers act as unified system. One channel member owns the others, has contracts with them, or has so much power that they all cooperate
Corporate VMS
Contractual VMS
Administer VMS
Types of Vertical Marketing System
Corporate VMS
combines successive stages of production and distribution under single ownership- channel leadership is established through common ownership
Contractual VMS
independent firms at different levels of production and distribution join together through contracts
Franchise Organizations
contractual vertical marketing system in which a channel member, called a franchisor, links several stages in the production-distribution process
Manufacturer-Sponsored Retailer Franchise System
Ford and its network of independent franchised detailers
Manufacturer-Sponsored Wholesaler Franchise System
Coca-Cola licenses bottlers (wholesalers) in various world markets who buy Coca-Cola syrup concentrated and then bottle and sell the finished product to retailers locally
Service-Firm-Sponsored Retailer Franchise System
Burger King and its nearly 10,500 franchisee-operated restaurants around the world
Administer VMS
coordinates successive stages of production and distribution through the size and power of one of the parties
Horizontal Marketing System
a channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity
Multichannel Distribution Systems
a distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments
Marketing Channel Designs
calls for analyzing consumer needs, setting channel objectives, identifying major channel alternatives, and evaluating those alternatives
Marketing Channel Management
selecting, managing, and motivating individual channel members evaluating their performance over time
Marketing Logistics
Physical Distribution
Selective Distribution
Exclusive Distribution
Intensive Distribution
Number of Marketing Intermediaries
Selective Distribution
the use of more than one but fewer than all of the intermediaries who are willing to carry a company’s products (Televisions, furniture, home appliances)
Exclusive Distribution
Giving a limited number of dealers the exclusive right to distribute the company’s products in their territories (luxury brands, cars, etc.)
Intensive Distribution
A strategy in which they stock their products in as many outlets as possible (toothpaste, candy, etc.)
Warehousing
Inventory Management
Transportation
Logistics Information Management
Major Logistics Functions
-Growth of non-store retailing
-Retail convergence and the rise of mega-retailers
-Global expansion of major retailers
-Growing importance of technology
-Retail stores as communities and hangout places, importance of experiential retailing
Key Trends in Retailing
Disintermediation
the cutting out of marketing channel intermediaries by product or service producers or the displacement of traditional resellers by radical new types of intermediaries