2. Channels of Distribution
Chapter 14
Chapter One
Marketing’s Role in the Global Economy
Channels of Distribution
McGraw-Hill/Irwin
Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.
For use only with Perreault and McCarthy texts. © 2002 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin

3. Marketing’s Role in the Global Economy
Chapter Goals
Chapter One
Marketing’s Role in the Global Economy
Nature and importance of middlemen and distribution channels
Direct sales to retailers
Decisions in designing a channel
Major channels for goods and services
Vertical marketing systems
Choosing specific channels and middlemen
Intensity of distribution
Conflict and control within channels
Legal considerations in channels
McGraw-Hill/Irwin
Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.
For use only with Perreault and McCarthy texts. © 2002 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin

4. Middlemen Middlemen A business firm that renders services directly
related to the sale/purchase
of a product as it flows through
from producer to consumer
You can eliminate middlemen, but not the
essential distribution activities they
perform

5. Distribution Channels
People and firms involved
in the transfer of title to a product
as the product moves from producer to
ultimate consumer or business user
Final
Consumer Or
Business
User
Producers
Middlemen

6. Middleman Activities

7. Middleman Activities

8. Major Channels of Distribution

9. Vertical Marketing Systems

10. Choice of Channels: Market
Type of
Market
Number of
potential
customers
Geographic
concentration
Order
size

11. Choice of Channels: Product
Perishability
Unit
Value
Technical
Nature

12. Choice of Channels: Middleman
Services provided by
middlemen
Availability of desired
middlemen
Producer’s and
middlemen’s policies

13. Choice of Channels: Company
Desire
for channel control
Services provided
by seller
Ability
of management
Financial resources

14. Intensity of Distribution

15. Conflict in Channels Horizontal Different types Middlemen of middlemen
of the same type
Different types
of middlemen
on the same level
Retailer

16. Conflict in Channels Vertical Producer vs. Wholesaler Producer vs.
Retailers

17. Who Controls the Channels?
Expertise
Sanctions
Rewards

18. Channel as Partnership
Cooperation
Collaboration
Coordination
Relationship
Marketing

19. Legal Considerations Exclusive Tying dealing contracts Exclusive
territory
Refusal
to deal

20. Marketing’s Role in the Global Economy
Key Terms and Concepts
Chapter One
Marketing’s Role in the Global Economy
Middlemen
Merchant middlemen
Agent middlemen
Disintermediation
Distribution channel
Gray marketing
Direct distribution
Indirect distribution
Multiple distribution channels
Vertical marketing system
Corporate vertical marketing system
Contractual vertical marketing system
Administered vertical marketing system
Intensity of distribution
Intensive distribution
Selective distribution
Exclusive distribution
Channel conflict
Chargeback
Horizontal conflict
Scrambled merchandising
McGraw-Hill/Irwin
Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.
For use only with Perreault and McCarthy texts. © 2002 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin

21. Marketing’s Role in the Global Economy
Key Terms and Concepts
Chapter One
Marketing’s Role in the Global Economy
Vertical conflict
Slotting fee
Channel control
Channel power
Exclusive dealing
Tying contract
Refusal to deal
Exclusive-territory policy
McGraw-Hill/Irwin
Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.
For use only with Perreault and McCarthy texts. © 2002 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin