Marketing Channels Chapter 13
Determine 2-3 different ways of transportation for the following • 24 air compressors, each of 36’’x36’’x60’’, 400 p. each to Dallas, TX. • Two crates of rare orchids, 12’’x24’’x48’’, each weighing 27 pounds to NYC • 6 classic cars purchased by an eccentric, wealthy customer in UK. The cars are not currently running.
Vocabulary • Marketing (Supply/Distribution)Channel: group of individuals and organizations that directs the flow of products from producers to customers. • Supply chain management: starts before physical distribution, covering procurement of inputs, conversion into finished products, and product movement to final destinations
Firm Customer Channel members • ? retail stores • wholesalers • telemarketing • mail order catalogs • web sites • "Push" : getting channels to ………your product • "Pull" : getting consumers to ……...your product by name
Why would a manufacturer want to use a wholesaler or a retailer?
Functions performed by intermediaries • Transactional (promote, negotiate, take risks ) • Logistical • Facilitating (researching and financing)
LogisticsorPhysicalDistribution Logistical : Physical Distribution Gets It to Customers Coordinating the flow of information among channel members
Accumulating Bulk-Breaking Assorting Facilitating : Channel Specialists Adjust Discrepancies with Regrouping Activities ……………… (Medical Clinics) Allocating or Bulk-Breaking QUANTITY COSTCO Heterogeneity Sorting (Grading Oranges) …………….. ASSORTMENT
Retailers Take Title to Goods Merchant Wholesalers Take Title to Goods Agents and Brokers Do NOT Take Title to Goods Channel Intermediaries
Types of Marketing ChannelsChannels for Consumer Products Direct Channel TRADITIONAL DUAL DISTRIBUTION & REVERSE CHANNELS
Exploring Multiple Channel Options:Benefits of Different Channels
CHANNEL STRATEGY DECISIONS 1.Selection of a Marketing Channel 2.Intensity of Distribution 3.Management of Relationships
1.Selection of a Marketing Channel • Market factors: • Consumer vs Business markets (large vs. small quant, service) • Geographic location (concentrated, dispersed) • Product factors: • Complex, customized, expensive • Products’ life cycle/delicacy (e.g. mature, perishable) • Producer factors: • Big/small • Image protection
Red Bull is sold at convenience stores, supermarkets and warehouse clubs. Red Bull has _________ distribution • selective • exclusive • intermediate • intensive • limited
Retailer Retailer Retailer Retailer Distributor Horizontal
Firm Customer Channels • "Captive Channels" : channels owned by firm • "Non-Captive Channels" : channels not owned by firm • "When do retailers have "channel power"? • firm's product is not well differentiated from competitors • threat of backward integration
Firm Customer Channels Channel conflict examples • Firm: Your retail prices are too high, and are driving down demand • Retailer: With your wholesale prices, it’s the only way we can make money • Firm: You carry too many lines, our product isn't even noticed on shelves • Retailer: Customers come first. BTW, why don't you prune your line.
Firm Customer Retail store Website • "free – riding" by internet channel • customers who use more than one channel get confused • return policies • origin of merchandise • different prices