Introduction Berman Chapter 1 Version 3.0 MARKETING CHANNELS Introduction Berman Chapter 1 Version 3.0 1

Introduction 1. Marketing Channels defined 2. Functions Performed by Intermediaries 3. Alternative Channel Structures 4. Characteristics of Channel Relationships 5. Importance of Channel Management to the Firm 6. Importance of Channel Management to the Economy 2

1. Channel Management Definition an organized network or system of agencies and institutions performing activities to link producers with users 3

1. Marketing Channels Components organized network or system sharing common objectives concerning customer service and product image independently owned / integrated strategy long term contracts common goals 4

1. Marketing Channels Participants Channel Participants agencies and institutions intermediaries manufacturers wholesalers retailers facilitators research, physical distribution, financing, advertising 5

1. Marketing Channels Activities physical possession ownership promotion negotiation financing risking ordering payment linkage of producers and users conventional channels franchises contract pricing 6

1. Marketing Channels Relationships Retailing - sales of goods and services to end users Wholesaling - sales for resale Physical Distribution - movement of finished goods inventory to channel members 7

2. Intermediary Functions sorting - breaking bulk and contactual efficiency mass distribution customer contact credit market research 8

2. Channel Functions can be shifted among members cannot be eliminated Bucklin’s system of service outputs spatial convenience or market decentralization lot size product variety or assortment breadth waiting or delivery time 9

3. Alternative Channel Structures channel specialization competitive advantage tasks short (direct) vs long (indirect) channels channel width - intensity intensive - selective - exclusive dual channels 10

4. Special Channel Characteristics member divided loyalty - suppliers and customers selling to (push) and selling through (pull) long term relationships relationship marketing ( partnering) high switching costs direct and indirect 11

5. Channel Importance Competitive Advantage Channel Based Strategy Relationships of firms areas of management levels, marketing, sales, advertising, products, physical distribution, market research, legal, controller, manufacturing, production control, engineering, etc 12

5. Channel Importance Competitive Advantage exclusive distribution dual channels non-traditional channels access to broad network technology superb customer service low cost distribution access to a specialized markets 13

6. Channel Management Importance to the Economy Product Planning Pricing Management Promotion Management Channel Values Employment Sales 14

6. Channel Importance Product Planning new products / same channel new products / same members existing members / new channels channel members / product recall new products / shelf space products services/ franchises / image specialized products / small markets refusal to sell 15

6. Channel Importance Pricing Management wholesaler / retailer profit margins price reductions / retailers list price gray markets / transshipping quantity discounts / maximize share discounters pricing / full service retailers seasonal discount structure / retailer order 16

6. Channel Importance Promotion Management push / pull budgeting advertising, public relations, sales promotion mix coop advertising plan sales contests, other promotions wholesaler quotas 17