9 - Marketing Channels Flashcards
partners in the supply chain
upstream partners: firms that supply the materials needed to create a product/service
downstream partners: marketing + distribution channels
difference between supply chain and demand chain view
supply chain = “make and sell”
- raw materials, productive inputs, factory capacity…
demand chain = “sense and response”
- planning starts w/ needs of target customer
-> both may be too limited, instead = value delivery network
value delivery network
composed by the company, suppliers, distributors and ultimately, customers who partner with each other to improve the performance of the entire system
marketing channel
set of interdependent organizations that help make a product/service available for use or consumption by the consumer
how channel members add value
- transform products into products wanted by consumers
- bridge time, place and possession gaps that separate goods and services from users
key functions of channel members (8)
information (market research) promotion (persuasive communication) contact matching (fitting offer to buyer) negotiation physical distribution financing risk taking
channel levels
direct marketing channels
indirect marketing channels (1+ level of intermediaries)
-> longer channel = less control + greater complexity
flows in channels (5)
flow of:
- products
- payment
- promotion
- ownership
- information
channel conflict
horizontal conflict - among firms at same level
vertical conflict - among firms in different levels
- more common
types of channel arrangements
conventional distribution systems
multichannel distribution systems
vertical marketing systems (VMS)
horizontal marketing systems
conventional distribution systems
each separate business seeking to maximize its own profits, perhaps even at the expense of profits for the system as a whole
vertical marketing system (VMS)
producers, wholesalers and retailers acting as a unified system
3 types of VMS
- corporate = stages combined under single leadership
- contractual - independent firms at different levels who join together through contracts (eg. franchise)
- administered = leadership is assumed by one or a few dominant members
types of franchises
manufacturer-sponsored retailer franchise system (eg. Ford)
manufacturer-sponsored wholesaler franchise system (eg. Coca Cola syrup concentrate)
service-firm-sponsored retailer franchise system (eg. Burger King)
horizontal marketing systems
two or more companies at one level join together to follow a new marketing opportunity
- combined resources allow to accomplish more
multichannel distribution systems
single firms set up 2+ marketing channels to reach different customer segments
direct store delivery (DSD)
method of selling and distributing products for a large variety of industries directly to retail stores
- bypassing the retailer’s distribution center
disintermediation
- cutting out of marketing channel intermediaries
2. displacement of traditional resellers by new intermediaries.
channel design decisions
analyzing consumer needs
setting channel objectives
identifying channel alternatives
evaluating channel alternatives
analyzing consumer needs
identify market segments
what they from the channel
determine the best channels to use
setting channel objectives
determine targeted levels of customer service
balance consumer needs against costs and customer price preferences
identifying channel alternatives
types of intermediaries:
- intensive distribution - stock products in as many outlets as possible
- selective distribution - few intermediaries who are willing to carry a company’s product (home electronics)
- exclusive distribution - limited number of dealers w/ exclusive right to distribute its products in their territories (luxury brands)
responsibilities of channel members
price policies
sale conditions
territory rights
specific services
evaluating channel alternatives
economic criteria (likely costs, profitability…)
control issues (company prefers to keep as much control as possible)
adaptability criteria (keep channel flexible so that it can adapt to environmental changes)
public policy and distribution decisions
exclusive distribution
exclusive dealing (sellers shouldn’t handle competitors’ products)
exclusive territorial agreement
tying agreements (dealer must take most or entire line)
