Objectives Work Performed by Marketing Channels ChannelDesign Decisions

Objectives ä Work Performed by Marketing Channels ä Channel-Design Decisions ä Channel-Management Decisions ä Channel Dynamics © 2000 Prentice Hall

How a Distributor Reduces the Number of Channel Transactions 1 2 3 4 5 6 A. Number of contacts without a distributor Mx. C=3 X 3=9 7 8 9 = Manufacturer © 2000 Prentice Hall = Customer

How a Distributor Reduces the Number of Channel Transactions 1 Store 2 3 = Manufacturer © 2000 Prentice Hall B. Number of contacts with a distributor Mx. C=3+3=6 4 5 6 = Customer = Distributor

Distribution Channel Functions Information Transfer Payments Physical Distribution Risk Taking © 2000 Prentice Hall Communication Negotiation Ordering Financing

Consumer Marketing Channels 0 -level channel Manufacturer Consumer 1 -level channel Manufacturer Retailer Consumer 2 -level channel Mfg Wholesaler 3 -level channel Mfg Wholesaler © 2000 Prentice Hall Jobber

Industrial distributors Manufacturer’s representative Manufacturer’s sales branch © 2000 Prentice Hall Consumer Manufacturer Industrial Marketing Channels

Customers’ Desired Service Levels ä Lot size ä Waiting time ä Spatial convenience ä Product variety ä Service backup © 2000 Prentice Hall

Break-Even Cost Chart Manufacturer’s sales agency Company sales force Selling costs (dollars) © 2000 Prentice Hall SB Level of sales (dollars)

Channel Management Decisions Training Motivating Evaluating © 2000 Prentice Hall FEEDBACK Selecting

Types of Vertical Marketing Systems Corporate Common Ownership at Different Levels of the Channel Administered Leadership is Assumed by One or a Few Dominant Members Contractual Agreement Among Channel Members © 2000 Prentice Hall

Conventional Distribution Channel vs. Vertical Marketing Systems Vertical marketing channel Manufacturer Wholesaler Retailer Consumer © 2000 Prentice Hall Wholesaler Conventional marketing channel Retailer Consumer

Causes of Channel Conflict ä Incompatibility ä Difference in Perception ä Dependence © 2000 Prentice Hall

Legal & Ethical Issues in Channel Relations ä Exclusive Dealing ä Exclusive Territories ä Tying Agreements ä Dealers’ Rights © 2000 Prentice Hall

Review ä Work Performed by Marketing Channels ä Channel-Design Decisions ä Channel-Management Decisions ä Channel Dynamics © 2000 Prentice Hall