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Marketing Mix

Marketing Mix . Channels of Distribution. Marketing Channel. Producers lack financial resources necessary for direct marketing Direct marketing is not feasible for many offerings Using channels frees money for investment in main business Intermediaries are more efficient.

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Marketing Mix

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  1. Marketing Mix Channels of Distribution

  2. Marketing Channel • Producers lack financial resources necessary for direct marketing • Direct marketing is not feasible for many offerings • Using channels frees money for investment in main business • Intermediaries are more efficient

  3. Graphical Depiction of a Supply Chain

  4. Marketing Channel • “An organized system of marketing institutions through which products, resources, information, funds, and/or product ownership flow from the point of production to the final user.” • Forward and Backward Flow Functions: • Develop / disseminate communication • Store and move the physical products • Oversee transfer of ownership • Place orders with manufacturers • Facilitate payment of bills • Gather information • Negotiate price and transfer of ownership • Finance inventories • Assume risk

  5. Levels of Channels

  6. Channel Factors Intermediary type Number of intermediaries Terms and responsibilities of intermediaries Merchants Buy, take title, and resell merchandise Agents Find customers, negotiate, do not take title to merchandise Facilitators Aid in distribution, do not negotiate or take title to merchandise Channel-Design Decisions

  7. Channel Factors Intermediary type Number of intermediaries Terms and responsibilities of intermediaries Exclusive distribution Severely limited distribution Selective distribution Some intermediaries willing to carry good are selected Intensive distribution Offering is placed in as many outlets as possible. Channel-Design Decisions

  8. Channel Factors Intermediary type Number of intermediaries Terms and responsibilities of intermediaries Price policies Price list and schedule of discounts Conditions of sale Payment terms and guarantees Territorial rights Define territory / terms Services to be performed by party Channel-Design Decisions

  9. Channel-Design Decisions The Value-Adds Versus Costs of Different Channels

  10. Channel Dynamics • Channel systems are constantly evolving and developing • Vertical Marketing Systems • Corporate VMS • Administered VMS • Contractual VMS • Horizontal Marketing Systems • Multichannel Marketing Systems

  11. Channel Dynamics • Conflict, Cooperation, & Competition • Five basic sources of power: • Legitimate Power • Reward Power • Coercive Power • Information Power • Referent Power • Types of conflict • Vertical, horizontal, and multichannel • Causes of conflict • Major causes: Goal incompatibility; unclear roles and rights • Other potential causes exist • Managing channel conflict

  12. Channel Dynamics • Legal and Ethical Issues in Channel Relations • Two common distribution practices are legal as long as they don’t substantially lessen competition: • Exclusive dealing • Tying agreements

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