Marketing: Channels for Distribution
Channel Conflict
- Arises when one channel member believes another member is engaged in detrimental behavior that affects its goals - Two Types: Vertical and Horizontal
Administered Vertical Marketing System
- Coordination in successive stages of production and distribution by the size and influence of one channel member - Ex. Proctor and Gamble
Electronic Channels
- Employ the Internet to make products and services available for consumption - Cannot perform many logistical functions, left to distributor
Classifying Retailers
- Form of Ownership - Level of Service - Type of Merchandise Line
Contractual Vertical Marketing System
- Independent production and distribution firms integrate their efforts on a contractual basis - Three Variations: Wholesaler-sponsored, Retailer-sponsored, and Franchising - Four Types of Franchising: Manufacturer/Retail, Manufacturer/Wholesaler, Service/Retail, Service
Vertical Conflict
- Occurs between different levels in a marketing a market channel, cutting out an intermediary - Three sources: Manufacturer to Wholesaler, Manufacturer to Retailer, Wholesaler to Retailer
Horizontal Conflict
- Occurs between intermediaries at the same level in a marketing channel, i.e. between two or more retailers or wholesalers - Two Sources: Overlapping territories and Dual distribution
Intermediary Functions
- Transactional Function: Buying, Selling, Risk Taking - Logistical Function: Assorting, Storing, Sorting, Transporting - Facilitating Function: Financing, Grading, Marketing Information and Research
Multichannel Marketing
- Using different marketing channels to reach customers - Dual distribution: an arrangement whereby a firm reaches different buyers by employing two or more different types of channels - Ex. "brick and click"
Non-Store Retailers
- Vending - Direct Mail/Catalogs - TV home shopping - Online Retailing - Telemarketing - Direct Selling
Channels for Consumers vs. Business Products
Variations on Direct and Indirect Channels
Corporate Vertical Marketing System
combination of production and distribution under single ownership
Selective Distribution
Firm selects a few retailers in a specific geographical area to carry its products
Intensive Distribution
Firm tries to place its products and services in as many outlets as possible
Marketing Channel
Firms involved in the process of making products available to consumers
Intermediaries
Firms that serve as the link between sellers and buyers
Form of Ownership
Independent Retailer - Independent business owned by an individual Corporate Chain - Multiple outlets under common ownership Contractual Systems - Independently owned stores that operate like a chain
Channel Level
Indicates the number of intermediaries
Vertical Marketing Systems
Intended to improve coordination and cooperation between channel members - Corporate Systems - Contractual systems - Administered systems
Legal Considerations
Clayton Act: - Prohibits exclusive dealings and tying arrangements (full-line forcing) - Vertical Integration is subject to legal action Sherman Act: - Resale Restrictions: who and where products can be sold
Type of Merchandise Line
Depth of Line - Considerable assortment in a product category - Ex. Sports Authority, Best Buy, Barnes and Nobles Breadth of Line - Broad product lines, limited depth - Ex. Department stores
Consumers Channels
Direct: Producer and Consumer deal directly Indirect: - Retailer - Wholeseller --> Retailer - Agent --> Wholesaler --> Retialer
Business Channels
Direct: Producer and industrial user deal directly Indirect: - Industrial distributor --> Industrial user - Agent --> Industrial user - Agent --> Industrial distributor --> Industrial user
Common Types of Wholesalers
Merchant Wholesalers - Independently Owned, take title Agents and Brokers - Do not take title Manufacturer Branches/Offices - Owned by producers
Exclusive Distribution
One retailer in a specified geographical areas will carry a firm's products
Level of Service
Self-Service Limited Service Full Service