1. การจัดการช่องทางการจัดจำหน่าย Distribution Channel Management
Chapter 1
Marketing Channels
Structure and Functions

2. Chapter 1 Outlines Learning Objectives
- The meaning of marketing channel
Why manufacturers choose to use intermediaries
between themselves and end-users
- What marketing flows define the work of the channel
Members of marketing channel and the flows in
which they specialize
Framework for marketing channel design and
implementation

3. Marketing Channels The importance of Marketing Channels to
Today’s Business
- Gatekeeper between manufacturer and end-user
Main differentiator of Company’s market offering
from its competitors
Impact to end-users overall perception and satisfaction
Key strategic marketing asset in beating rivals
Tools to help companies operate more profitably
and do better jobs of meeting customers’ demands
and preferences

4. Marketing Channels Basic Definition of Marketing Channel
“A Marketing Channel is a set of interdependent
organizations involved in the process of making
a product or service available for use or
consumption”

5. Marketing Channels Points of Discussion
Marketing Channel often viewed as key strategic
asset to manufacturer
Why Manufacturers not selling all products and
services directly to all end-users
Why marketing channel ever change or new
Marketing channels ever emerge

6. Marketing Channels Demand-side Factors As a facilitation of search
Products/services are easier to find
Target end-users are more readily to reach
Adjustment of natural discrepancy between
large product quantity being produced and wide
variety being demanded
Channel members perform function of sorting goods

7. Marketing Channels Supply-side Factors
Routinization of transactions to minimize
distribution cost
- Standardization of goods and services
- Channel inventory management
- Reduction in number of contacts

8. Marketing Channels Points of Discussion
Intermediaries participate in the work of marketing
channel add value and help reduce cost in the channel
- What are the functions performed by intermediaries?
The largest component of carrying cost of inventory
Capital costs are the opportunity costs
Members in the channel can be eliminated or
substituted, but the flows performed by these
members cannot be eliminated

9. The Work of Marketing Channels
Eight Universal Flows in Marketing Channel

10. Marketing Channels Key Members in Marketing Channel
Manufacturers (Branded VS. private-label)
Intermediaries (Wholesale, retail, specialized)
End-users (Business customer, individual consumers)
Channel Captain – Prime mover in establishing and maintaining the channel links

11. Marketing Channels Forms of Retail Intermediaries Department Stores
Mass Merchandisers
Specialty Stores
Category Killers
Convenience Stores
Catalogers
On-line Retailers

12. Marketing Channels Specialized Intermediaries perform specific flow
Financial Flow (Insurance, Finance, credit card
Companies)
Physical Possession Flow (Logistic and shipping firms)
Ordering and Payment Flow (Information technology firms)
Promotion Flow (Advertising agencies)
Marketing Intelligence (Marketing research firms)

13. Framework for Channel Analysis
The Marketing Channel Challenge involves two major processes
Designing the right channel which involve
- Segmenting the market
- Choosing which segment to target
- Right channel structure to meet target
end-users demands at the most efficient way

14. Framework for Channel Analysis
The Marketing Channel Challenge involves two major processes
Implementation of the design
- Understanding each channel member’s
source of power
- Degree of dependency
- Potential of channel conflict
- Channel coordination for optimal working
environment

15. Framework for Channel Analysis

16. Marketing Channels Points of Discussion
The Concept of Interdependence and the
value of Specialization
- Demands for service outputs are used for
segmenting the market

17. Channel Design The meaning of Service Output Service Outputs include
“The value-added services created by channel members
and consumed by end-users along with the product purchased”
Service Outputs include
Bulk-breaking
Spatial convenience
Waiting and delivery time
Assortment and variety
Customer service
Product/Market/usage information provision

18. Channel Design Channel Structure Decision involve with three
main elements
What kinds of intermediaries to use
(own sales force vs. distributor)
The exact identity of the channel partner
(specific characters of channel member)
3. How many of each type of channel member
(Intensive, selective or exclusive)

19. Channel Design Points of Discussion
Why channel manager not target all the
segments identified in the segmentation
analysis?

20. Channel Design Distribution Gap
“It’s the constraints that prevent channel manager
of not implementing the optimal level of
distribution due to
1. Managerial bounds (internal influences)
2. Environmental bounds (external influences)
3. Competitor bounds (external influences)

21. Channel Design Distribution Gap
There are gaps on both Demand and Supply sides:
- On the demand side---at least one of the service
output demands is not being appropriately met
by the channel (either undersupplied or oversupplied)
- On the supply side---at least one of the flows in
the channel of distribution is carried out at too
high a cost

22. Channel Implementation
Channel members fail to perform the flow tasks
due to channel conflicts
Types of conflicts among members
- Goal conflicts – different goal and objectives
- Domain conflict – disagreements over domain
of action and responsibility
- Perceptual conflict – difference in perceptions
of the marketplace

23. Channel Implementation
Managing conflict by assessing the true degree
of each issue relevant to channel management
- Frequency of disagreement
- Intensity of disagreement
- Importance of the issue
Conflict resolution through the use of economic
incentives coupled with good communication

24. Channel Institutions The holistic approach in channel management
- Retailing based format – connecting point
between channel and end-user
- Wholesaling based format – distribution’s
“back room”
- Logistics firms – specialists that co-ordinate
activities of the marketing channel

25. Channel Institutions The holistic approach in channel management
- Supply chain parties – involve upstream and
downstream toward end-users
- Franchising business – small business
people operate under the guidance from
large-scale parent company