1
MARKETING CHANNELS
Introduction
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
3
1. Channel Management
Definition
• an organized network or system • of agencies and institutions
• performing activities
4
1. Marketing Channels
Components
• organized network or system
– sharing common objectives
– concerning customer service and product image – independently owned / integrated strategy
5
1. Marketing Channels
Participants
• Channel Participants
– agencies and institutions – intermediaries
• manufacturers • wholesalers • retailers
– facilitators
6
1. Marketing Channels
Activities
• physical possession • ownership
• promotion • negotiation
• financing • risking • ordering • payment linkage of producers and users
conventional channels franchises
7
1. Marketing Channels
Relationships
• Retailing - sales of goods and services to end users
• Wholesaling - sales for resale
8
2. Intermediary Functions
• sorting - breaking bulk and contactual efficiency
• mass distribution • customer contact • credit
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
10
3. Alternative Channel Structures
• channel specialization
• competitive advantage tasks
– short (direct) vs long (indirect) channels – channel width - intensity
• intensive - selective - exclusive
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
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,
13
5. Channel Importance
Competitive Advantage
• exclusive distribution • dual channels
• non-traditional channels • access to broad network • technology
• superb customer service • low cost distribution
14
6. Channel Management Importance
to the Economy
• Product Planning
• Pricing Management
• Promotion Management • Channel Values
15
6. Channel Importance
Product Planning
• new products / same channel • new products / same members
• existing members / new channels • channel members / product recall • new products / shelf space
16
6. Channel Importance
Pricing Management
• wholesaler / retailer profit margins • price reductions / retailers list price • gray markets / transshipping
• quantity discounts / maximize share
17
6. Channel Importance
Promotion Management
• push / pull budgeting
• advertising, public relations, sales promotion mix
• coop advertising plan
