1. Marketing Channels and Supply-Chain Management
A group of individuals and organizations directing products from producers to customers
Supply Chain Management
Long term partnerships among marketing channel members that reduce inefficiencies, costs, and redundancies in the marketing channel to satisfy customers
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2. Marketing Channels Consist of Intermediaries
Marketing Intermediary
An intermediary linking producers to other intermediaries or to ultimate consumers through contractual arrangements or through the purchase and resale of products
Direct Channel
Producer
Customer
Indirect Channel
Producer
Customer
Intermediary
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3. Marketing Channels Form a Supply Chain
Supply-Chain Management
Long-term partnerships among marketing channel members that reduce inefficiencies, costs, and redundancies and develop innovative approaches to satisfy customers
Optimizes costs throughout the whole channel for efficiency and service
Includes all entities that facilitate product distribution and benefit from cooperative efforts
Arises from the need to achieve a more competitive position
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4. Marketing Channels Create Utility
Time Utility
The product is available when the customer wants it (newspaper delivery).
Place Utility
The product is available in locations where customers wish to purchase it (convenience stores).
Possession Utility
The customer has access to the product to use or to store for future use (raincoats).
Form Utility
The product is assembled, prepared or otherwise refined to suit customer needs.
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5. Marketing Channels Facilitate Exchange Efficiencies
Reduce the overall costs of market exchanges
Reduce search costs for customers
Maintain order in the marketplace
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6. Efficiency in Exchanges Provided by an Intermediary
FIGURE 14.1
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7. Typical Marketing Channels for Consumer Products
FIGURE 14.2
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8. Typical Marketing Channels for Business Products
FIGURE 14.3
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9. Distribution Intermediaries
Industrial Distributor
An independent business that takes title to business products and carries inventories
Manufacturers’ Agent
An independent businessperson who sells, on commission, the complementary products of several producers; does not takes title to or hold inventories.
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10. Multiple Marketing Channels and Channel Alliances
Dual Distribution
The use of two or more channels to distribute the same product to the same target market
Strategic Channel Alliance
An agreement whereby the products of one organization are distributed through the marketing channels of another
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11. Channel Leadership, Cooperation, and Conflict
Channel Captain
A dominant member (producer, wholesaler, or retailer) of a marketing channel or supply chain
Establishes channel policies and coordinates development of the marketing mix
Channel Power
The ability of one channel member to influence another member’s goal achievement
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12. Channel Conflict Sources of Channel Conflict
Disagreements arising among channel members
Communication difficulties jeopardizing coordination
Increased use of multiple distribution channels by manufacturers creating conflicts with distributors and retailers
Intermediaries diversifying into and offering competing products
Producers attempting to circumvent intermediaries and dealing directly with retailers
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13. Channel Cooperation Improving Channel Cooperation
Unifying channel to maintain market order
Agreeing to direct efforts toward common objectives
Precisely defining each channel member’s tasks
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14. Channel Integration Vertical Channel Integration
Two or more stages of the marketing channel are under one management.
Channel members coordinate their efforts to reach a target market.
Vertical Marketing System (VMS)
A marketing channel managed by a single channel member to achieve efficient, low-cost distribution
Corporate VMS
Administered VMS
Contractual VMS
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15. Channel Integration (cont’d)
Horizontal Integration
Organizations at the same level of operation are combined under one management.
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16. Intensity of Market Coverage
Intensive Distribution
Uses all available outlets to distribute a product.
Appropriate for convenience products with high replacement rates
Provides availability and reduces search time
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17. Intensity of Market Coverage (cont’d)
Selective Distribution
Uses only some available outlets to distribute a product
Appropriate for shopping products and durable goods with low replacement rates
Desirable when special effort— such as customer service— is important
Tuscaloosa’s Only Authorized Dealer
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18. Intensity of Market Coverage (cont’d)
Exclusive Distribution
Uses a single outlet in a fairly large geographic area to distribute a product
Appropriate for expensive, high-quality products purchased infrequently
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