1. Chapter 1 Marketing Channels and Supply Chain Management10
Marketing Channels and Supply Chain Management

2. Marketing or Distribution Channel
A 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. Chapter 1
Channel Functions
These functions should be assigned to the channel member who can add the most value for the cost
Information
Negotiation
Promotion
Physical
Distribution
Contact
Financing
1). Information: Gathering and distributing marketing research and intelligence information about actors and forces in the marketing environment needed for planning and aiding exchange.
2). Promotion:
3). Contact: with prospective buyers.
4). Matching—buyers with sellers.
5). Negotiation so ownership can take place.
6). Others include:
a). Physical distribution (such as transportation and storage).
b). Financing.
c). Risk taking.
Note: The question is not whether these functions must be performed but rather who will perform them.
Matching
Risk Taking

4. Consumer and Business Channels

5. Channel Behavior The channel will be most effective when:
Chapter 1
Channel Behavior
The channel will be most effective when:
each member is assigned tasks it can do best.
all members cooperate to attain overall channel goals.
If this does not happen, conflict occurs:
Horizontal Conflict occurs among firms at the same level of the channel (e.g., retailer to retailer).
Vertical Conflict occurs between different levels of the same channel (e.g., wholesaler to retailer).
Some conflict can be healthy competition.

6. Channel Conflict
When it decided to sell its familiar containers at retail through Target stores, Tupperware avoided conflicts with its army of in-home sales consultants by inviting them into the stores to demonstrate the products.

7. Conventional vs. Vertical Marketing System

8. Types of Vertical Marketing Systems
Corporate VMS
Common Ownership at Different
Levels of the Channel (e.g., Sears)
Chapter 1
Types of Vertical Marketing Systems
Contractual VMS
Contractual Agreements Among
Channel Members (e.g., ACE Hardware)
Control
High
Administered VMS
Leadership is Assumed by One or
a Few Dominant Members (e.g., Kraft)
Low

9. Innovations in Marketing Systems
Chapter 1
Innovations in Marketing Systems
Horizontal Marketing System
Hybrid Marketing System
Two or more companies at one channel level join together to follow a new marketing opportunity.
Example: Banks in grocery stores
A single firm sets up two or more marketing channels to reach one or more customer segments.
Example: Retailers and catalogs

10. Number of Intermediaries
Intensive distribution
Exclusive distribution
Selective distribution