Chapter 12- Marketing Channels

Setting Channel Objectives

-Determine targeted levels of customer service -Balance consumer needs against costs and customer price preferences

Evaluating Major Alternatives

-Economic criteria -Control issues -Adaptability criteria

Analyzing Consumer Needs

-Find out what target consumers want from the channel -Identify market segments -Determine the best channels to use -Minimize the cost of meeting customer service requirements

Channel Management Decision

-Selecting channel members -Managing channel members -Motivating channel members -Evaluating channel members

How Channel Members Add Value

-Transform the assortment of products into assortments wanted by consumers -Bridge the major time, place, and possession gaps that separate goods and services from users -Information -Promotion -Contact -Matching -Negotiation -Physical distribution -Financing -Risk taking

Major Logistics Functions

-Warehousing -Inventory management -Transportation -Logistics information management

Responsibilities of Channel Members

A producer and the intermediaries need to agree on -Price policies -Conditions of sale -Territory rights -Specific services

Marketing channel design

Designing effective marketing channels by analyzing customer needs, setting channel objectives, identifying major channel alternatives, and evaluating those alternative

Sustainable supply chains

Developing a sustainable supply chain is not only environmentally responsible, it can also be profitable

Horizontal marketing system

a channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity

Franchise organization

a contractual vertical marketing system in which a channel member, called a franchisor, links several stages in the production-distribution process

Marketing channel (distribution channel)

a set of interdependent organizations that help make a product or service available for use or consumption by the consumer of business user

Tying agreements

agreements where the dealer must take most or all of the line

Supply Chain Management

involves managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers Suppliers -> Company -> Resellers -> Customers

Marketing logistics (physical distribution)

involves planning, implementing, and controlling the physical flow of goods, services, and related information from points of origin to points of consumption to meet consumer requirements at a profit.

Value delivery network

is composed of the company, suppliers, distributors, and ultimately, customers who partner with each other to improve the performance of the entire system

Exclusive distribution

occurs when the producer gives only a limited number of dealers the exclusive right to distribute its products in their territories

Types of intermediaries

refers to channel members available to carry out channel work. Most companies face many channel member choices

Channel conflict

refers to disagreement among channel members over goals, roles, and rewards -Horizontal conflict -Vertical conflict

Demand chain "sense and respond"

view suggests that planning starts with the needs of the target customer

Exclusive dealing

when the seller requires that the exclusive distribution sellers not handle competitor's products

Exclusive territorial agreements

where producer or seller limit territory

Corporate vertical marketing systems

combine successive stages of production and distribution under single ownership

Marketing channels

consist of firms that have partnered for their common good with each member playing a specialized role

Vertical Marketing Systems Conventional distribution systems

consist of one or more independent producers, wholesalers, and retailers, each separate business seeking to maximize its own profits, perhaps even at the expense of profits for the system as a whole

Upstream partners

firms that supply raw materials, components, parts, information, finances, and expertise needed to create a product or service

Downstream partners

include the marketing channels or distribution channels that look toward the customer, including retailers and wholesalers

Supply chain "make and sell" view

includes the firm's raw materials, productive inputs, and factory capacity

Goal of marketing logistics

should be to provide a targeted level of customer service at the least cost

Disintermediation

the cutting out of marketing channel intermediaries by producers or the displacement of tradiional resellers by new intermediaries