Place Flashcards
What is a channel structure?
- A marketing channel can be defined as the structure linking a group of individuals or organisations through which a product or service is made available to the consumer or user.
- Degree of relationships can vary between parties for example buyers and sellers on FB v supermarkets and manufacturers.
- The ROUTE selected to move a product to a market through different intermediaries is known as the CHANNEL STRUCTURE.
What are the 4 consumer good channel structures?
- Producer –> consumer = Direct supply
- Producer –>retailer –> consumer = Short channel
- Producer –> wholesaler –> retailer –> consumer = Long channel
- Producer –> agent –> wholesaler –> retailer –> consumer
What is direct supply
- Manufacturer and consumer deal directly with each other.
- Many ways of this taking place – personal selling, retail selling, direct mailing, online etc.
- Eliminates the need for intermediaries.
What is short channel distribution?
- Most popular with large retailers.
- Buy in large quantities, obtain special prices.
- Direct relationships between Manufacturer and Retailers.
What is long channel distribution?
- Useful for smaller manufacturers and smaller retailers.
- Don’t have the resources to access a wide range of customers or manufacturers.
- Wholesaler does both for each party.
- Buys in bulk from the manufacturers and then splits that up for retailers all under one roof.
- Provides a wider range of retailers for smaller manufacturers too.
- Wholesaler is effectively marketing on the behalf of the manufacturer.
What is producer –> agent –> wholesaler –> retailer –> consumer distribution?
- Longest and most indirect channel.
- Maybe an unknown market – use an agent that knows it better, for example if looking to expand internationally, export goods etc.
- Agent earns commission.
- Manufacturer is dependent upon the Agent -Relationship Marketing is key!
What are the 4 B2B channel structures?
- Manufacturer –> user
- Manufacturer –> distributor –> user
- Manufacturer –> agent –> user
- Manufacturer –> agent –> distributer –> user
What is the Manufacturer –> user?
- Direct channel – most appropriate where the goods sold have a high unit cost and high technical content.
- Small number of buyers.
- Manufacturer manages their own sales and distribution teams to negotiate sales, provide service and administration.
- For example, plastic manufacturers who deal directly with car manufacturers
What is the Manufacturer –> distributor –> user?
- Less direct channel.
- Like the short channel in the Consumer Goods channels.
What is the Manufacturer –> agent –> user?
- Agents are sometimes used where direct entry isn’t viable – expensive, lack of expertise in the market etc.
- Commission basis – exchange process.
- Agent acts on behalf of the client.
- Manufacturer to Agent to Distributor to User.
- In fast moving export markets * Multiple channels of distribution.
- Agent coordinates sales and distributors provide stock and premises close to the customer.
- Allows more market segments to be reached.
What is the Manufacturer –> agent –> distributer –> user?
- In fast moving export markets.
- Multiple channels of distribution.
- Agent coordinates sales and distributors provide stock and premises close to the customer.
- Allows more market segments to be reached.
What are the components of rational?
- MONEY – every transaction costs money.
- COSTS - delivery costs, order packing costs, marketing costs, admin costs and so on.
Intermediary increases efficiency and reduces the cost of individual transactions.
What are the categories of adding value by using an intermediary?
- Facilitating value
- Transactional value
- Logistical value
What is Facilitating value?
- Financing
- Training
- Information
- After sales
What is Transactional value?
- Risk
- Marketing
- Administration
What is Logistical value?
- Assortment
- Storage
- Sorting
- Bulk buying
- Transportation
What are the types of intermedaries?
- Distributors and Dealers – car dealers.
- Agents and Brokers – Universities – recruitments.
- Wholesalers – catering / cleaning services.
- Franchisees – precise specification |McDonalds.
- Retailers – direct.
What comes under the category form of ownership?
1) Independent
(2) Corporate Chain
(3) Contractual System
What comes under the category of level of service?
(1) Full Service
(2) Limited Service
(3) Self Service
What are the types of retailers?
(1) Department Stores: Large scale retailing institutions, Minimise price competition.
2) Discount retailers: Positioned on low prices and the reduced costs.
3) Convenience Stores: corner shops, Long opening hours.
4) Supermarkets: Self service basis, minimal customer service, Offer convenience, variety and compete on price.
(5) Out of town Speciality Stores: Designed to kill off the competition, Narrow but deep assortment of products.
6) Town Centre Speciality Stores: Narrow product range and differentiated offering, Smaller than out of town stores.
What is store presence?
- Stores provide sensations for customers – touch, taste, smell etc. – important for some types of products.
- In store staff – give advice to the customer.
- Non store retailers – away from a fixed store location:
- Direct selling – door to door in home selling, party plans.
- Mail order and teleshopping – printed catalogue, dedicated channels.
- Vending machines – less than 1%of retail.
What are the 4 types of channel competition?
- Horizontal competition
- Intertype competition
- Vertical competition
- Channel system competition
What is vertical market systems?
Vertical marketing systems (VMSs) provide channel leadership and consist of producers, wholesalers, and retailers acting as a unified system – there are 3 different types:
- Corporate marketing systems.
- Contractual marketing systems.
- Administered marketing systems.
What is conventional distribution systems?
Conventional distribution systems consist of one or more independent producers, wholesalers, and retailers, each separate business seeking to maximise its own profits, perhaps even at the expense of profits for the system as a whole.
