Channel Lecture: Flashcards
Channel:
Path that enables products/services to flow from producers to end users. Also thought of as a value delivery network.
Agent/Brokers:
Negotiates sales without taking title to the goods. Generally paid by commission or fees.
Wholesaler:
Takes title to the goods and resells them.
Retailer:
Sells to end user.
Facilitating Agency:
Moves the goods (no title, no negotiating). Examples are postal service, railroad, storage warehouse, etc.
What are the functions and value of channels?
- Transactional functions
- Logistical functions
- Facilitating functions
Density of Coverage:
Intensive: Distribution through every reasonable outlet in a market.
Selective: Distribution through multiple, but not all, reasonable outlets in a market.
Exclusive: Distribution through a single wholesaling middleman and/or retailer in a market.
Exclusive Density of Coverage Characteristics:
- High influence of reseller market activities
- High margins throughout the channel
- Stable level of distribution
- Less competition at the point of sale
Selective Density of Coverage Characteristics:
- Resellers compete to carry product
- Less reseller loyalty
Intensive Density of Coverage Characteristics:
- High coverage
- Convenient for end customers
- High conflict potential
Disintermediation:
- Move toward direct to consumer marketing
- Hybrid systems
- E-commerce
- Channel conflict
Vertical Integration:
Combines successive stages of production and distribution under single ownership.
Administered VMS:
One member of the channel is large and powerful enough to coordinate the activities of the other members without an ownership stake.
Corporate VMS:
One member of the distribution channel owns the other members but each continues to perform a separate task.
Trends:
- Growth of direct marketing
- Major downstream power shifts in the channel (from producers and wholesalers to retailers to customers
- Greater use of hybrid systems to reach different consumers through distinct marketing channels.
