MARKETING CHANNELS Introduction Berman Chapter 1 Version 3

MARKETING CHANNELS Introduction Berman Chapter 1 Version 3. 0 1

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 • 6. Importance of Channel Management to the Economy 2

1. Channel Management Definition • • an organized network or system of agencies and institutions performing activities to link producers with users 3

1. Marketing Channels Components • organized network or system – sharing common objectives – concerning customer service and product image – independently owned / integrated strategy – long term contracts – common goals 4

1. Marketing Channels Participants • Channel Participants – agencies and institutions – intermediaries • manufacturers • wholesalers • retailers – facilitators • research, physical distribution, financing, advertising 5

1. Marketing Channels Activities • • physical possession ownership promotion negotiation • • financing risking ordering payment linkage of producers and users conventional channels franchises contract pricing 6

1. Marketing Channels Relationships • Retailing - sales of goods and services to end users • Wholesaling - sales for resale • Physical Distribution - movement of finished goods inventory to channel members 7

2. Intermediary Functions • sorting - breaking bulk and contactual efficiency • mass distribution • customer contact • credit • market research 8

2. Channel Functions • can be shifted among members • cannot be eliminated • Bucklin’s system of service outputs – spatial convenience or market decentralization – lot size – product variety or assortment breadth – waiting or delivery time 9

3. Alternative Channel Structures • channel specialization • competitive advantage tasks – short (direct) vs long (indirect) channels – channel width - intensity • intensive - selective - exclusive – dual channels 10

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 – direct and indirect 11

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, manufacturing, production control, engineering, etc 12

5. Channel Importance Competitive Advantage • • exclusive distribution dual channels non-traditional channels access to broad network technology superb customer service low cost distribution access to a specialized markets 13

6. Channel Management Importance to the Economy • • • Product Planning Pricing Management Promotion Management Channel Values Employment Sales 14

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 products services/ franchises / image specialized products / small markets refusal to sell 15

6. Channel Importance Pricing Management • • • wholesaler / retailer profit margins price reductions / retailers list price gray markets / transshipping quantity discounts / maximize share discounters pricing / full service retailers seasonal discount structure / retailer order 16

6. Channel Importance Promotion Management • push / pull budgeting • advertising, public relations, sales promotion mix • coop advertising plan • sales contests, other promotions • wholesaler quotas 17