1. Chapter 12 Marketing Channels and Channel Members
Idil Yaveroglu
Lecture Notes

2. Marketing Channel
Set of interdependent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user.

3. Importance of Marketing Channels
How Channel Members Add Value
Fewer contacts (contact efficiency).
Match product assortment demand with supply.
Bridge, time, place, and possession gaps that separate products from users
Contact Efficiency

4. Channel Member Functions
Information: Gathering and distributing marketing intelligence information
Promotion: Developing and spreading communications
Contact: Finding and communicating with prospective buyers
Matching: Shaping and fitting order to buyers needs
Negotiation: Reaching and agreement on price and terms
Physical Distribution: Transporting and storing
Financing: Acquiring and using funds to cover the costs of channel work
Risk taking: Assuming the risks of carrying out channel work

5. Channel Structure Three Dimensions Length of channel
Intensity at various levels
Types of intermediaries

6. Channel Length Manufacturer Manufacturer Manufacturer Manufacturer
Direct
Channel
Retailer
Channel
Wholesaler
Channel
Agent/Broker
Channel
Manufacturer
Manufacturer
Manufacturer
Manufacturer
Agent
Wholesaler
Wholesaler
Retailer
Retailer
Retailer
Consumer
Consumer
Consumer
Consumer

7. Length of a Channel – Direct or Indirect?
Direct Channel Advantages
Control over distribution - pricing, ads, display
Closer to customer - establish relationships; sell other products
Customize product, meet customer needs (Dell)
Timely distribution
Cost saving
Differentiation -if other firms using distributors
Indirect Channel Advantages
Specialized channel intermediaries performing functions

10. Channel Intensity
number of intermediaries through which a manufacturer distributes its goods
Intensive
Distribution
Selective
Exclusive

11. Channel Intensity Achieve mass market selling. Many Convenience goods.
Intensity Level
Objective
Number of Intermediaries
Intensive
Selective
Exclusive
Achieve mass market selling.
Convenience goods.
Work with selected
intermediaries.
Shopping and some
specialty goods.
Work with single intermediary. Specialty goods and industrial
equipment.
Many
Several
One

13. Using a Selective Distribution Strategy

14. Redken Exclusive Distribution Used for Redken Hair-Care Products

15. Vertical Marketing Systems
Corporate VMS
Contractual VMS
Administered VMS

16. Marketing Channel Conflict
Goal impeding behavior by one or more channel members
Vertical Conflict: occurs between channel members at different levels
Horizontal Conflict: occurs between channel members at the same level. Eg. Territorial encroachment
Vertical Conflict
Horizontal Conflict
Producer
Producer
conflict
Intermediary
Intermediary A
Intermediary A
conflict
End Users
End Users