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Marketing channel:
System of marketing institutions that promotes the physical flow of goods and services, along with ownership title, from producers to consumer or business user; also called a distribution channel
Channels provide the means by which the firm moves the goods and services it produces to ultimate users Channels perform four important functions. They:
Marketing intermediary: wholesaler or retailer that operates between producers and consumers or business users; also called a middleman
Wholesaler:
Logistics: process of coordinating the flow of information, goods, and services among members of the distribution channel Physical distribution:
Direct Selling
Direct Channel: Marketing channel that moves goods directly from a producer to ultimate user
Direct Selling: Strategy designed to establish direct sales contract between producer and final user
DUAL DISTRIBUTION
Dual distribution:
Channel design includes decisions concerning channel length and channel width Factors which impact the selection of a marketing channel include:
Characteristics of Short Characteristics of Long Channels Channels Market factors Business users Geographically concentrated Extensive technical knowledge and regular servicing required Large orders Product factors Perishable Complex Expensive Consumers Geographically diverse Little technical knowledge and regular servicing not required Small orders Durable Standardized Inexpensive
Continued on next slide . . . Table 3.1: Factors Influencing Marketing Channel Strategies
Producer factors
Competitive factors
Distribution Intensity: Number of intermediaries through which a manufacturer distributes its goods Intensive Distribution: Channel policy in which a manufacturer of a convenience product attempts to saturate the market
CHANNEL STRATEGY DECISIONS Exclusive distribution: Channel policy in which a Determining firm grants exclusive rights to a single Distribution Intensity wholesaler or retailer to sell its products and a particular geographic area
Selective distribution: Channel policy in which a firm chooses only a limited number of retailers to handle its product line
Channel Management
Once channels have been designed, the challenge becomes effectively managing all the relationships
The challenge is to set up a system or method for assigning responsibilities, controlling behaviors, and monitoring performance Various forms of Vertical Marketing Systems allow us to do this
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Administered Systems
Administered marketing system: VMS that achieves channel coordination when a dominant channel member exercises its power Example:
Contractual Systems
Contractual marketing system: VMS that coordinates channel activities through formal agreements among channel members like: WholesalerSponsored Voluntary Chains Retail Cooperatives Franchises
Supply (value) chain: sequence of suppliers that contributes to the creation and delivery of a good or service
Ryder
Ryder, a Member of the Supply Chain, Helps Firms Control Their Delivery Costs
PHYSICAL DISTRIBUTION
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Transportation
Common carriers move freight via all modes of transportation for the general public Contract carriers do not serve the general public
Classes of Carriers
Private carriers do not offer services for hire, but provide transportation services solely for internally generated freight
Transportation
FedEx
FedEx: Now Offering a Form of Multinational Intermodal Coordination for Freight When Speed Is Needed
Rail
Average
Average
Low
Low
High
Average
Water
Truck Pipeline Air
Very slow
Fast Slow Very fast
Average
High High High
Very low
High High Average
Limited
Very extensive Very limited Average
Very high
Average Very low Low
Very low
High Low Very high
Warehousing
Storage Warehouse: warehouse that holds goods for moderate to long periods prior to shipment, usually to buffer seasonal demand Distribution Warehouse:
Unitizing: process of combining individual materials into large loads for easy handling Containeriztion: