Chapter 13 Marketing : Channels of Distribution

Marketing Channel
A set of interdependent organizations that ease the transfer of ownership as products move from producer to business user or consumer
Discrepancy of Quantity
The difference between the amount of product produced and the amount an end user wants to buy
Discrepancy of Assortment
The lack of all the items a customer needs to receive full satisfaction from a product or products
Temporal Discrepancy
A situation that occurs when a product is produced but a
customer is not ready to buy it
Spatial Discrepancy
The difference between the location of a producer and the location of widely scattered markets
Retailer
A channel intermediary that sells mainly to customers
Merchant Wholesaler
An institution that buys goods from manufacturers, takes title to goods, stores them, and resells and ships them
Agents and Brokers
Wholesaling intermediaries who facilitate the sale of a product by representing channel members
Logistics
The process of strategically managing the efficient flow and storage of raw materials, in-process inventory, and finished goods from point of origin to point of consumption
Channel Intermediaries
Retailers
Wholesalers
Agents and Brokers
Channel Functions
Transactional
Logistical
Facilitating
Direct Channel
A distribution channel in which producers sell directly to consumers
Business product direct channels
1. producer to industrial user
2. producer to government buyer
Industrial distributor
Industrial distributor to industrial user
Agent/Broker Channel
agents or brokers to industrial user
Agent/Broker Industrial Channel
agents or brokers to industrial distributor to industrial user
Alternative Channel Arrangements
1. Multiple channels
2. Nontraditional Channels
3. Strategic channel alliances
Market Factors
1. Customer profiles
2. Consumer or Industrial Customer
3. Size of market
4. Geographic location
Product Factors
1. Product Complexity
2. Product Price
3. Product Standardization
4. Product Life Cycle
5. Product Delicacy
Producer Factors
1. Producer Resources
2. Number of Product Lines
3. Desire for Channel Control
Intensive Distribution
A form of distribution aimed at having a product available in every outlet
Selective Distribution
A form of distribution achieved by screening dealers to eliminate all but a few in any single area
Exclusive Distribution
A form of distribution that established one or a few dealers within a given area
Arm’s Length Relationship
Fulfills a one time or unique need; low involvement/risk
Channel Power
A channel member’s capacity to control or
influence the behavior of other channel members
Channel Control
A situation that occurs when one marketing
channel member intentionally affects another member’s behavior
Channel Leader
A member of a marketing channel that exercises
authority/power over the activities of other members
Channel Conflict
A clash of goals and methods between distribution channel members
Channel Partnering
The joint effort of all channel members to create a supply chain that serves customers and creates a competitive advantage
Channel Members
all parties in the marketing channel that negotiate with one another, buy and sell products, and facilitate the change of ownership between buyer and seller in the course of moving the product from the manufacturer into the hands of the final consumer
Cooperative Relationships
A relationship between companies that takes the form of informal partnership with moderate levels of trust and information sharing as needed to further each company’s goals
Dual Distribution
an arrangement whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product
Horizontal Conflict
a channel conflict that occurs among channel members on the same level
Integrated Relationships
a relationship between companies that is tightly connected, with linked processes across and between firm boundaries, and high levels of trust and interfirm commitment
Strategic Channel Alliance
a cooperative agreement between business firms to use the other’s already established distribution channel
Supply Chain
Consists of all parties involved, directly or indirectly, in the procurement of a product or raw material
Vertical Conflict
a channel conflict that occurs between different levels in a marketing channel, most typically between the manufacturer and wholesaler or between the manufacturer and retailer