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CHANNELS

CHANNELS. DIRECT INDIRECT e.g. services Consumer goods Industrial products Convenience - location Advantages: - assortment - greater control - size of purchase - feedback Funds/Risks (credit) Specialization. Functions of Channel Member. Information

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CHANNELS

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  1. CHANNELS DIRECT INDIRECT e.g. services Consumer goods Industrial products Convenience - location Advantages: - assortment - greater control - size of purchase - feedback Funds/Risks (credit) Specialization

  2. Functions of Channel Member • Information • Financing/Risk • Distribution • Matching: Grading/sorting Bulk breaking Assembling Assorting • Promotions

  3. Market Exposure: • Intensive distribution - Timex • Selective distribution - Espirit • Exclusive distribution - Piaget, McDonalds

  4. Other Concepts Dual distribution Wheel of retailing Reverse channels - recycling Gray markets – unauthorized channels Inventory turnover rate = Sales/average inventory

  5. Physical Distribution or Logistics:Movement/Handling of Goods Modes of Transport __________________________________________ Rail Road Water Pipe Air Volume 36.5% 24.9% 16.3% 22% .34% Speed 3 2 4 5 1 (Rank) Cost 3 4 1 2 5 (Rank)

  6. Recent Trends: Containerization JIT - Just in time EDI - Electronic data interchange

  7. Channel Conflict: Horizontal: Mail order vs. retailers Vertical: GM - dealers/Coke - bottlers Solutions Channel Captain: - Manufacturer: P&G - Middleman: Sears, K-Mart

  8. VMS: Vertical Marketing Systems Corporate: The Limited, Gap, Sherwin-Williams Administered: Informal agreement Contractual: Franchise (500,000*1/3rd sales) Wholesalers: IGA - Independent Grocers Association/Western Auto Co-Ops - True Value Hardware

  9. HMS: Horizontal Marketing Systems Pillsbury - Refrigerated dough sold through Kraft Lamar Savings bank - Safeway Stores H&R Block - Hyatt Legal Services

  10. Wholesalers Industries Types of Wholesalers (W/S)Functions Hardware, Full line W/S All functions Drugs Assortment Auto parts Limited line W/S Seafood industries Health foods Hoisery, toys, HBA Rack Jobber Furnish racks Consignment Bill for sold material

  11. Wholesalers Industries Types of Wholesalers (W/S)Functions Office supplies Cash & Carry W/S Electric supplies No delivery Groceries No credit No info Bulky products Drop shipper e.g., coal, lumber Get orders Ship-mfr.- customer

  12. Wholesalers Industries Types of Wholesalers (W/S)Functions Meat, diary, bakery Truck jobbers Auto parts, footwear Agents Selling Light engineering Real estate Brokers Dating services Food

  13. Types of Retailers: (1) Speciality - High quality; exclusive (2) Department store - Dillard’s, Harrods $17m sales = 40% “margin - profit” (3) Mass Merchandisers (MM) High volume = profit K-Mart, Walmart $20m, 60,000 sq. ft. Supermarkets 2/3 food sales, $11m, 230 Catalog showroom Jewelry, gifts Discount houses Cameras, computers

  14. (3) Mass Merchandisers (MM) - continued Hypermarkets 200,000 sq. ft. Warehouse clubs 8-10% Single line MM: Toys R Us, IKEA, Circuit City “Category Killers” (4) Convenience stores 7-11, Stop-N-Go (5) Vending machines High cost 41% (6) Direct mail (7) Home shopping • Door-to-door • E-retailers – Amazon.com Wheel of retailing

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