What is a Marketing Channel?

1. What is a Marketing Channel? • Marketing channel (a.k.a. distribution channel) - network of organizations that create time, place, and possession utilities for consumers Dr.

2. Channel Structure Three Dimensions Length of channel Intensity at various levels Types of intermediaries Dr.

3. Channel Structure Length of marketing channel 1 level 2 level 3 level 4 level Manufacturer Manufacturer Manufacturer Manufacturer Agent Wholesaler Wholesaler Retailer Retailer Retailer Consumer Consumer Consumer Consumer Dr.

4. Channel Structure Intensity at various levels Exclusive Distribution Selective Distribution Intensive Distribution Dr.

5. Channel Structure Intensity at various levels Exclusive Distribution Practiced when a manufacturer restricts product distribution to a single retailer in a particular market or just a relatively few retailers Products that are expensive, infrequently purchased, are sought after by consumers (i.e. specialty goods), or which require considerable after-sale servicing are the most likely candidates for exclusive distribution Dr.

6. Channel Structure Intensity at various levels Selective Distribution Selectively distributed bands are available in multiple retail outlets in a particular market Shopping products, or those that consumers seek out, are sold through selective distribution Dr.

7. Channel Structure Intensity at various levels Intensive Distribution Used when convenience products are sold through virtually every available retail outlet in a particular market, e.g. soft drinks, candy, gum, cigarettes Dr.

8. Channel Structure Types of intermediaries Merchant Middlemen Functional Middlemen Dr.

9. Channel Structure Types of intermediaries Do not take title to products; they simply facilitate the exchange process by performing buying and/or selling functions. Functional Middlemen Dr.

10. Channel Structure Types of intermediaries Take title to products and resell them. Merchant Middlemen Dr.

11. Channel Structure • Determinants of channel structure include: • Distribution tasks • Economics of distribution tasks • Management's desire for distribution control Dr.

12. Channel Structure • Distribution tasks • Familial Relationship-style • Concentration • Equalization • Dispersion • Selection process-style • Accumulating • Selecting • Sorting Dr.

13. Channel Structure • Distribution tasks • Resolve discrepancies between consumers and producers • Quantity - buffer mass produced goods • Assortment - allow producers to focus while providing customers selection • Time - hold goods until ready • Place - connect producers and consumers Dr.

14. Channel Structure • Economics of distribution tasks • Specialization or division of labor Dr.

15. Channel Structure • Economics of distribution tasks • Transaction efficiency Mfg. A Mfg. B Mfg. C Without intermediaries 1 2 3 4 5 6 7 8 Dr.

16. Channel Structure • Economics of distribution tasks • Transaction efficiency Mfg. A Mfg. B Mfg. C With intermediaries Intermediary 1 2 3 4 5 6 7 8 Dr.

17. Channel Structure • Management’s desire for control • The shorter the channel structure the higher the control • Needed when a manufacturer must protect product image, etc. Dr.