Objectives
Objectives
Objectives
Objectives
Work Performed by Marketing Channels
Work Performed by Marketing Channels
Channel-Design Decisions
Channel-Design Decisions
Channel-Management Decisions
Channel-Management Decisions
How a Distributor Reduces the
Number of Channel Transactions
= Customer
= Customer
= Manufacturer
= Manufacturer
A. Number of contacts
A. Number of contacts
without a distributor
without a distributor
M x C = 3 X 3 = 9
M x C = 3 X 3 = 9
1
1
3
322
How a Distributor Reduces the
How a Distributor Reduces the
Number of Channel Transactions
Number of Channel Transactions
= Distributor = Distributor = Customer = Customer = Manufacturer = Manufacturer
B. Number of contacts
B. Number of contacts
with a distributor
with a distributor
M x C = 3 + 3 = 6
M x C = 3 + 3 = 6
Distribution Channel
Functions
Distribution Channel
Functions
Ordering
Ordering
Payments
Payments
Communication
Communication
Transfer
Transfer
Negotiation
Negotiation
Financing
Financing
Risk Taking
Risk Taking
Physical
Distribution
Physical
Distribution
Consumer Marketing Channels
Consumer Marketing Channels
Wholesaler
Wholesaler JobberJobber RetailerRetailer ConsumerConsumer
Consumer Consumer
Retailer
Retailer
ConsumerConsumer ManufacturerManufacturer
0-level channel
Wholesaler
Wholesaler RetailerRetailer ConsumerConsumer
Mfg Mfg
2-level channel
Mfg Mfg
3-level channel 1-level channel
Industrial distributors
M
an
u
fa
c
tu
re
r
C
o
n
su
m
e
r
Manufacturer’s representative
Manufacturer’s sales branch
Industrial Marketing Channels
Industrial Marketing Channels
Industrial Marketing Channels
Customers’ Desired Service
Customers’ Desired Service
Levels
Levels
Customers’ Desired Service
Customers’ Desired Service
Levels
Levels
Lot size
Lot size
Waiting time
Waiting time
Spatial convenience
Spatial convenience
Product variety
Product variety
Selling
Selling
costs
costs
(dollars)
(dollars)
Level of sales (dollars)
Level of sales (dollars)
Break-Even Cost Chart
Break-Even Cost Chart
Company
Company
sales force
sales force
Manufacturer’s
Manufacturer’s
sales agency
sales agency
S
Channel Management Decisions
Channel Management Decisions
Selecting
Selecting
F
E
E
D
B
A
C
K
Motivating
Motivating
Training
Training
Types of Vertical Marketing Systems
Types of Vertical Marketing Systems
Corporate
Common Ownership at Different Levels of the Channel
Corporate
Common Ownership at Different Levels of the Channel
Contractual
Contractual Agreement Among Channel Members
Contractual
Contractual Agreement Among Channel Members
Administered
Leadership is Assumed by One or a Few Dominant Members
Administered
Conventional Distribution Channel vs.
Conventional Distribution Channel vs.
Vertical Marketing Systems
Vertical Marketing Systems
Causes of Channel Conflict
Causes of Channel Conflict
Causes of Channel Conflict
Causes of Channel Conflict
Incompatibility
Incompatibility
Difference in Perception
Difference in Perception
Legal & Ethical Issues in
Legal & Ethical Issues in
Channel Relations
Channel Relations
Legal & Ethical Issues in
Legal & Ethical Issues in
Channel Relations
Channel Relations
Exclusive Dealing
Exclusive Dealing
Exclusive Territories
Exclusive Territories
Tying Agreements
Tying Agreements
Review
Review
Review
Review
Work Performed by Marketing Channels
Work Performed by Marketing Channels
Channel-Design Decisions
Channel-Design Decisions
Channel-Management Decisions
Channel-Management Decisions
