Chapter 13 Objectives

1. Chapter 13 Objectives • Describe what work is performed by marketing channels. • Identify what decisions companies face in designing, managing, evaluating, and modifying their channels. • Discuss trends in channel dynamics. • List ways in which channel conflict can be managed.

2. Key Functions ofChannel Members • Gather information about customers, competitors, and other players • Develop and disseminate communications • Reach agreement on price and terms • Place orders with manufacturers • Acquire funds to finance inventories • Assume risks • Provide for product storage and movement • Provide for buyers’ bill payments • Oversee transfer of ownership

3. 1 2 3 Manufacturer Customers 4 5 6 7 8 9 Reducing the Number of Channel Transactions Number of contacts without a distributor: M x C = 3 X 3 = 9

4. 1 4 Manufacturer Customers Store 5 2 3 6 Reducing the Number of Channel Transactions Number of contacts with a distributor M x C = 3 + 3 = 6

5. Let’s Discuss Channel Levels • Give examples of each of the following types of channels: • Zero-level channel • One-level channel • Two-level channel • Three-level channel • Backward channel • How can producers of services effectively use channels?

6. Consmr Mfgr. Consmr Retailer Mfgr. Consmr Whlslr Retailer Mfgr. Consmr Whlslr Jobber Retailer Mfgr. Consumer Marketing Channels 0-level channel 1-level channel 2-level channel 3-level channel

7. 0-level channel 1-level channel Industrial distributors Manufacturer Consumer 2-level channel Manufacturer’s representative 3-level channel Manufacturer’s sales branch Industrial Marketing Channels

8. Channel-Design Decisions Analyzing customers’ desired service output levels Establishing objectives and constraints Identifying major channel alternatives Evaluating major alternatives

9. Channel-Design Decisions: Service Output Channels Lot size Waiting time Spatial convenience Product variety Service backup

10. Quick Quiz Channel-Design: Selecting Intermediaries • What types of intermediaries are available? • Describe exclusive distribution, selective distribution, and intensive distribution. • Define each of the following: • Price policy • Conditions of sale • Distributors’ territorial rights • Mutual services and responsibilities

11. Evaluating Major Alternatives Each alternative must be evaluated by the following factors: • Economic - decisions take into consideration general and specific economies • Control - consideration is given to how much control is kept or relinquished • Adaptive - lengthy commitments reduce spontaneity in the market

12. Let’s Discuss Training Motivating Evaluating Channel Management Decisions Selecting What happens in each stage? Feedback and modification

13. Corporate Common ownership at different levels of the channel Types of Vertical Marketing Systems Administered Leadership is assumed by one or a few dominant members Contractual Contractual Agreement Among Channel Members

14. Let’s Discuss More Channels... • Explain the following contractual VMS, then give specific examples: • Wholesaler-sponsored voluntary chain • Retailer-cooperatives • Franchises • How is a horizontal marketing system different from a vertical marketing system? • When does a multichannel marketing system occur?

15. Wholesaler Retailer Consumer Consumer Conventional Distribution vs. Vertical Marketing Systems Vertical marketing channel Conventional marketing channel Manufacturer Manufacturer Wholesaler Retailer

16. Quick Quiz Channel Conflict • What types of conflict arise in channels? • Describe multichannel conflict. • What is the main cause of channel conflict? • Name four mechanisms to resolve the conflict.

17. Exclusive dealing Exclusive territories Dealers’ rights Tying agreements Legal and Ethical Issues