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Marketing Channels

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

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Marketing Channels

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  1. Marketing Channels Chapter 13

  2. 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.

  3. 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

  4. 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

  5. Why would a manufacturer want to use a wholesaler or a retailer?

  6. Functions performed by intermediaries • Transactional (promote, negotiate, take risks ) • Logistical • Facilitating (researching and financing)

  7. LogisticsorPhysicalDistribution Logistical : Physical Distribution Gets It to Customers Coordinating the flow of information among channel members

  8. 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

  9. Marketing channels add Value

  10. Retailers Take Title to Goods Merchant Wholesalers Take Title to Goods Agents and Brokers Do NOT Take Title to Goods Channel Intermediaries

  11. Types of Marketing ChannelsChannels for Consumer Products Direct Channel TRADITIONAL DUAL DISTRIBUTION & REVERSE CHANNELS

  12. Exploring Multiple Channel Options:Benefits of Different Channels

  13. Types of Marketing ChannelsChannels for Industrial Products

  14. CHANNEL STRATEGY DECISIONS 1.Selection of a Marketing Channel 2.Intensity of Distribution 3.Management of Relationships

  15. 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

  16. 2. Intensity of Market coverage

  17. Red Bull is sold at convenience stores, supermarkets and warehouse clubs. Red Bull has _________ distribution • selective • exclusive • intermediate • intensive • limited

  18. 3. Management of relationship

  19. Retailer Retailer Retailer Retailer Distributor Horizontal

  20. 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

  21. 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.

  22. 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

  23. Questions?

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