Selecting and

Managing Marketing Channels

Anas Iftikhar
2815
Strategic Marketing Management

1. What is meant by a marketing

channel?
A: A marketing channel consists of
individuals and firms involved in the
process of making a product or
service available for use or
consumption by consumers or
industrial users.

CHANNEL STRUCTURE AND

ORGANIZATION
Marketing Channels for Consumer
Goods and Services
Direct Channel
Indirect Channels

FIGURE: Common marketing channels for

consumer goods and services

CHANNEL STRUCTURE AND

ORGANIZATION
Marketing Channels for Business Goods
and Services
Industrial Distributor
Agent

FIGURE 13-4 Common marketing channels

for business goods and services

CHANNEL CHOICE AND

MANAGEMENT
Factors in Choosing a Marketing
Channel
Provide the Best Target Market Coverage
Best Satisfy the Target Markets
Buying Requirements
Be the Most Profitable

CHANNEL CHOICE AND

MANAGEMENT
Factors in Choosing a Marketing
Channel
Target Market Coverage
Intensive Distribution
Exclusive Distribution
Selective Distribution

Intensity of Market
Coverage
Intensive Distribution
Using all available outlets to distribute a
product.
Convenience products with high
replacement rates

Provides availability and

reduces search time
Availability is more important
than outlet type
15 | 9

Intensity of Market Coverage

(contd)
Selective Distribution
Using only some available outlets to
Toyotas
distribute a product
Shopping products and durable
goods with low replacement rates

High qualification
requirements for
intermediaries to
distribute, sell, service,
and support products
15 | 10

Only
Authorized
Dealer

Intensity of Market Coverage

(contd)
Exclusive Distribution
Using a single outlet in a fairly large
geographic area to distribute a product
Expensive, high-quality products purchased
infrequently

Exclusive outlets provide an incentive to

sellers in limited markets
Dealers carry complete inventory and
have trained staff for sales and service
15 | 11

CHANNEL CHOICE AND

MANAGEMENT
Factors in Choosing a Marketing
Channel
Satisfying Buyer Requirements
Lot Size

Variety

Convenience

Services Backup

Waiting time

Reduction in number of contacts

How a Distributor Reduces the

Number of Channel Transactions

1
2
3
4

5
6

A. Number of contacts
without a distributor
MxC=3X3=9

7
8
9

= Manufacturer

= Customer

How a Distributor Reduces the

Number of Channel Transactions

B. Number of contacts
with a distributor
MxC=3+3=6

4
Store
2

= Manufacturer

= Customer

= Distributor

Conventional Distribution Channel vs.

Vertical Marketing Systems
Vertical
marketing
channel

Manufacturer

Manufacturer

Wholesaler

Retailer

Wholesaler

Conventional
marketing
channel

Retailer

Consumer
Consumer

Channel Conflict
What types of conflict arise in
channels?
What causes channel conflict?
What can be done to resolve conflict
situations?

What is Channel Conflict?

In channel distribution, conflict is not
negative, rather, some conflict
actually strengthen and improves a
channel.
Channel conflict arises when the
behavior of a channel member is in
opposition, to its channel
counterpart. It is opponent centered
and direct, in which the goal or
object sought is controlled by the
counterpart.

Types of Channel Conflict

Vertical Channel Conflict - conflict between different
levels within the same channel.
Horizontal channel conflict - involves conflict between
members at the same level within the channel.

Multichannel conflict - exists when the manufacturer

has established two or more channels that sell to the
same market.

Horizontal and Vertical Conflict in Marketing

Channels

Causes of Channel Conflict

Goal Incompatibility
Unclear Roles And Rights
Differences In Perception
Intermediaries Great Dependence

Managing Channel Conflict

Adoption of superordinate goals
Exchange persons between channel
levels
Cooptation
Diplomacy, mediation, arbitration for
chronic or acute conflict