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Marketing channel concepts

Marketing channel concepts. 2003 Fall semester Week 1 Instructor: Jungwan Lee. Learning objectives. Gain knowledge of the major reasons for the importance of marketing channels Have a understanding of the definition of the marketing channels, channel manager

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Marketing channel concepts

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  1. Marketing channel concepts 2003 Fall semester Week 1 Instructor: Jungwan Lee

  2. Learning objectives • Gain knowledge of the major reasons for the importance of marketing channels • Have a understanding of the definition of the marketing channels, channel manager • Discern the difference between channel management and logistics

  3. Case: coca-cola vs. pepsi • Market size= 54 billion USD/year • Coca cola 43% of market share • Pepsi 31% of market share • Pepsi –intensive distribution channel strategy: Place • outlets • 2 million stores • 450,000 restaurants • 1.4 million vending machines

  4. Strategic marketing tools • Product • Price • Promotion (advertising) • Place (distribution channels)

  5. Why has the marketing channel emphasized recently? • Greater difficulty of gaining a sustainable competitive advantage • Growing power of distributors (retailers) • The need to reduce distribution costs • The new stress on growth • The increasing role of technology

  6. Reasons for increasing importance of marketing channels • Channel strategy is long term. • Channel strategy usually requires a structure. • Channel strategy is based on relationships and people.

  7. Distribution costs table

  8. Marketing channel definition • The external contactual organization that management operates to achieve its distribution objectives. • External-organizational structure, interoganizational management • Contactual-negotiatory functions • Operates-management involvement • Distribution objectives-distribution goals

  9. Channel manager • Large consumer goods manufacturers-vice president of marketing • Industrial products companies-vice president of sales • Franchise organizations-manager of franchisee relations • Small businesses-owner • **decision maker of marketing channel decisions**

  10. Marketing channel strategy Product flow Negotiation flow Ownership flow Information flow Promotion flow Marketing management strategy Product Price Promotion Place (Distribution) Marketing channel and Marketing management strategy

  11. Channel structure • M-C • M-R-C • M-W-R-C • M-A-W-R-C • A=agent, C=consumer, M=manufacturer, R=retailer, W=wholesaler

  12. Distribution through intermediaries • Specialization and division of labor • Manufacturer->agents->wholesalers • >retailers->consumers: efficiency? • Contactual efficiency • Negotiation efforts (input)-Estimated dollar costs of inputs=Distribution objective (output) • Direct: 4 x 4= 16 contacts • Indirect: 4 + 4= 8 contacts

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