1 13. Marketing Channels & Supply Chains

2 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)

3 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

4 Channel Intermediaries Middleman Wholesaler Retailer Agent Broker Distributor Dealer Manufacturer’s branches and offices

5 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

6 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

7 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

8 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

9 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