Marketing Channels: Delivering Customer Value

Direct Marketing

A marketing channel without intermediaries An element of the promotion mix Fastest-growing form of marketing Benefits to Buyers: convenience, ready access to many products, access to comparative information about companies, products, and competitors Interactive and immediate Benefits to Sellers: Tool to build customer relationships Low-cost, efficient, fast alternative to reach markets Flexible, Access to buyers not reachable through other channels

Selective Distribution

Advantage: better market coverage than exclusive distribution, more control and less costly than intensive distribution, focus on fewer selective capable outlets Disadvantage: may not cover the market adequately, difficult to select dealers

Intensive Distribution

Advantages: increased sales, wide customer recognition Disadvantages: low price and low margin, difficult to control large amount of retailers

Exclusive Distribution

Advantages: maximum control over service/output, brand image & high markups, dealer loyalty, better forecasting and inventory control Disadvantages: risk of depending on an exclusive dealer, only suitable for high margin, high price and low sales product

Distribution Intensity

Customer's willingness to travel/search Unit cost of stocking/delivering Level of demand generation expected by channel

Number of Channel Levels

Direct: Customer Concentration Degree of attention from and control of channel Importance of direct customer contact on market feedback: Indirect

Criteria for Evaluating the Designs

Each alternative should be evaluated against: Economic criteria Control Adaptive criteria

Number of Channels

Exclusive--Selective--Intesnive

How Channel Members Add Value

Intermediaries offer producers greater efficiency in making goods available to target markets. Through their contacts, experience, specialization, and scale of operations, intermediaries usually offer the firm more than it can achieve on its own. Transform the assortment of products into assortments wanted by consumers Add value by bridging the major time, place, and possession gaps that separate goods and services from those who would use them

Business Marketing Channels

Producer-Business Costumer Producer-Business Distributor-Business Costumer Producer-Manufacturer's representatives of sale branch-business distributor-business customer

Customer Marketing Channels

Producer-Consumer Producer-Retailer-Consumer Producer-Wholesaler-Retailer-Consumer