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