1. MARKETING CHANNELS Introduction Berman Chapter 1 Version 3.0 1

2. Introduction • 1. Marketing Channels defined • 2. Functions Performed by Intermediaries • 3. Alternative Channel Structures • 4. Characteristics of Channel Relationships • 5. Importance of Channel Management to the Firm • 6. Importance of Channel Management to the Economy 2

3. 1. Channel ManagementDefinition • an organized network or system • of agencies and institutions • performing activities • to link producers with users 3

4. 1. Marketing ChannelsComponents • organized network or system • sharing common objectives • concerning customer service and product image • independently owned / integrated strategy • long term contracts • common goals 4

5. 1. Marketing ChannelsParticipants • Channel Participants • agencies and institutions • intermediaries • manufacturers • wholesalers • retailers • facilitators • research, physical distribution, financing, advertising 5

6. physical possession ownership promotion negotiation financing risking ordering payment 1. Marketing Channels Activities linkage of producers and users conventional channels franchises contract pricing 6

7. 1. Marketing ChannelsRelationships • Retailing - sales of goods and services to end users • Wholesaling - sales for resale • Physical Distribution - movement of finished goods inventory to channel members 7

8. 2. Intermediary Functions • sorting - breaking bulk and contactual efficiency • mass distribution • customer contact • credit • market research 8

9. 2. Channel Functions • can be shifted among members • cannot be eliminated • Bucklin’s system of service outputs • spatial convenience or market decentralization • lot size • product variety or assortment breadth • waiting or delivery time 9

10. 3. Alternative Channel Structures • channel specialization • competitive advantage tasks • short (direct) vs long (indirect) channels • channel width - intensity • intensive - selective - exclusive • dual channels 10

11. 4. Special Channel Characteristics • member divided loyalty - suppliers and customers • selling to (push) and selling through (pull) • long term relationships • relationship marketing ( partnering) • high switching costs • direct and indirect 11

12. 5. Channel Importance • Competitive Advantage • Channel Based Strategy • Relationships of firms • areas of management levels, marketing, sales, advertising, products, physical distribution, market research, legal, controller, manufacturing, production control, engineering, etc 12

13. 5. Channel ImportanceCompetitive Advantage • exclusive distribution • dual channels • non-traditional channels • access to broad network • technology • superb customer service • low cost distribution • access to a specialized markets 13

14. 6. Channel Management Importance to the Economy • Product Planning • Pricing Management • Promotion Management • Channel Values • Employment • Sales 14

15. 6. Channel ImportanceProduct Planning • new products / same channel • new products / same members • existing members / new channels • channel members / product recall • new products / shelf space • products services/ franchises / image • specialized products / small markets • refusal to sell 15

16. 6. Channel ImportancePricing Management • wholesaler / retailer profit margins • price reductions / retailers list price • gray markets / transshipping • quantity discounts / maximize share • discounters pricing / full service retailers • seasonal discount structure / retailer order 16

17. 6. Channel ImportancePromotion Management • push / pull budgeting • advertising, public relations, sales promotion mix • coop advertising plan • sales contests, other promotions • wholesaler quotas 17