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Chapter Twelve

Chapter Twelve. Marketing Channels Delivering Customer Value. What is a Distribution Channel?. A set of interdependent organizations (intermediaries) involved in the process of making a product or service available for use or consumption by the consumer or business user.

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Chapter Twelve

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  1. Chapter Twelve Marketing Channels Delivering Customer Value

  2. What is a Distribution Channel? A set of interdependent organizations (intermediaries) involved in the process of making a product or service available for use or consumption by the consumer or business user. Channel decisions are among the most important decisions that management faces and will directly affect every other marketing decision.

  3. Why Use Marketing Intermediaries? Selling through wholesalers and retailers usually is much more efficient and cost effective than direct sales

  4. Risk Taking Information Distribution Channel Functions Financing Promotion Contact Physical Distribution Matching Negotiation

  5. Marketing Channels

  6. Conventional vs. Vertical Marketing Channels

  7. Vertical Marketing Systems(VMS) A vertical marketing system (VMS) consists of producers, wholesalers, and retailers acting as a unified system One channel member either owns the others, has contracts with them, or wields so much power that they all cooperate

  8. Vertical Marketing Systems(VMS) Corporate VMS combines successive stages of production and distribution under single ownership Administered VMS coordinates successive stages of production and distribution through the size and power of the parties Contractual VMS consists of independent firms at different levels of production and distribution who join through contracts to obtain economies or sales impact

  9. Horizontal Marketing Systems (HMS) Horizontal marketing systems are when two or more companies at one level join together to follow a new marketing opportunity. Companies combine financial, production, or marketing resources to accomplish more than any one company could alone. e.g. Joint R&D projects Joint Promotions

  10. Channel Behavior and Organization Disintermediation occurs when product or service producers cut out intermediaries and go directly to final buyers, or when radically new types of channel intermediaries displace traditional ones Changing Channel Organization

  11. Channel Design Decisions Identifying Major Alternatives

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