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Marketing. Chapter 14. Managing Distribution Channels. Gilbert A. Churchill, Jr. J. Paul Peter. Channel of Distribution. Slide 14-1. Source. Definition. Lamb, Hair, and McDaniel.
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Marketing Chapter 14 Managing Distribution Channels Gilbert A. Churchill, Jr. J. Paul Peter
Channel of Distribution Slide 14-1 Source Definition Lamb, Hair, and McDaniel A set of interdependent organizations that facilitate the transfer of ownership as products move from producer to business user or consumer An array of exchange relationships that create customer value in the acquisition, consumption, and disposition of products and services Pelton, Strutton, and Lumpkin An organized network (system) of agencies and institutions that perform all the functions required to link producers with end users to accomplish the marketing task Churchill and Peter
How Intermediaries Improve Channel Efficiency Slide 14-2 Figure 14.1 Sales Contacts without an Intermediary Sales Contacts with an Intermediary Bike Shop Intermediary Manufacturers of Bicycle Helmets Bike Riders Manufacturers of Bicycle Helmets Bike Riders
Slide 14-3 Essential Channel Functions Transactional Functions Contacting and Promoting Negotiating Risk Taking Logistical Functions Physical Distribution Sorting Sorting out Accumulation Allocation Assorting Facilitating Functions Research Financing
Common Channels for Consumer Goods Slide 14-4 Figure 14.2 Direct Channel Consumer Producer Indirect Channels Consumer Retailers Producer Consumer Retailers Wholesalers Producer Consumer Agents Wholesalers Retailers Producer
Common Channels for Consumer Goods - Examples Slide 14-5 Corky’sBar-B-Q Consumer Consumer Safeway Frito Lay InterstateBeverage Corporation Soft DrinkRetailers Consumer Snapple SmallHouseplantGrower WholesaleFlorists RetailFlorists WillowRum Consumer
Common Channels for Organizational Goods Slide 14-6 Figure 14.3 Direct Channel Organizational buyer Producer Indirect Channels Organizational buyer Producer Distributors Organizational buyer Agents Producer Organizational buyer Agents Producer Distributors
Alternative Channel of Distribution Slide 14-7 Definition Example Type Multiple/dual channel Penn. tennis Balls, Cdico caller Id equipment a manufacturer distributing the same product to target market through two or more channels Nontraditional channel channels used to differentiate itself from the competition Internet, infomercial using one manufacturer’s already established channel to reach customers Blockbuster and Coca-Cola Strategic alliance channel Recycling (plastics, batteries), product recalls Reverse/backward channel products move in the opposite direction to traditional channels
Types of Vertical Marketing Systems Slide 14-8 Figure 14.5 VerticalMarketingSystems (VMSs) AdministeredVMSs CorporateVMSs ContractualVMSs Wholesalers Sponsored Cooperatives Retailer Sponsored Cooperatives Franchising
Three Categories of Contractual Vertical Marketing Systems Slide 14-9 McDonalds Franchises RetailerSponsoredCooperatives WholesalerSponsoredCooperatives True-ValueHardware Independent GrocersAlliance (IGA)
Factors to Evaluate for Selecting a Distribution Channel Slide 14-10a Figure 14.6 CustomerCharacteristics ProductCharacteristics IntermediaryCharacteristics NumberGeographic DispersionChannel PreferencesBuying BehaviorUse of Technology Cost per UnitPershabilityBulkinessStandardizationNeed for Installation and Maintenance AvailabilityWillingness to Carry ProductMarket ServicedDistribution Functions PerformedPotential for Conflict and CooperationOther Product OfferingsFinancial ConditionStrengths and Weaknesses
Factors to Evaluate for Selecting a Distribution Channel Slide 14-10b Figure 14.6 CompetitorCharacteristics EnvironmentalCharacteristics OrganizationCharacteristics Number and SizeDistribution StrategiesFinancial ConditionsSizes of Product Lines, Product MixesObjectives, Strategies and BudgetsStrengths and Weaknesses Economic ConditionsPolitical IssuesLaws, Regulations and EthicsCultural and Social Changes Technological Changes Size and Market ShareFinancial ConditionSize of Product Lines, Product MixAbility to Perform Distribution Functions Objectives, Strategies and BudgetsChannel ExperienceStrengths and Weaknesses
Levels of Market Coverage Slide 14-11 Table 14.2 Number ofIntermediariesin Trading Area Level Objective Examples Exclusive One Work with a single intermediary for a product that requires special resources or positioning; distribute luxury goods effectively. Electronic Liquid Fillers packaging systems; Rolex watches Selective Several Work closely with intermediaries who meet certain criteria; distribute shopping goods effectively. Bose speakers; Compaq computer systems Intensive Many Classic Coke; disposable writing pens Support mass selling; distribute convenience goods effectively.
Channel Leadership Slide 14-12 Information Expert Reward Channel Power Captain Referent Coercive Legitimate
Channel Options for Global Markets Slide 14-13 Table 14.8 DomesticManufacturers Least Control • Most • Control License Foreign Manufacturers License Foreign Manufacturers DomesticExporters GlobalIntermediaries GlobalBranches Global Markets Global Markets Global Markets Global Markets Global Markets
Legal, Political and Ethical Issues Slide 14-14 Exclusive Dealing A restriction imposed by a supplier on a customer forbidding the customer from purchasing some type of product from any other supplier. Closed Sale Territories A producer specifies a geographic area and assigns one intermediary to serve it. Tying Contracts An agreement under which a marketer sells a particular product only if the buyer also purchases another specific product. Full Line Forcing A type of tying arrangement in which an intermediary that wants to carry a particular product must buy the entire line. Gray Market The situation in which foreign distributors sell foreign versions of U.S. products in the United States. Slotting Allowances A fee paid by a manufacturer for space in a retail store.
