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Lamb, Hair, McDaniel

Lamb, Hair, McDaniel. 2010-2011. CHAPTER 13. Marketing Channels. Learning Outcomes. LO 1 Explain what a marketing channel is and why intermediaries are needed LO 2 Define the types of channel intermediaries and describe their functions and activities

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Lamb, Hair, McDaniel

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  1. Lamb, Hair, McDaniel 2010-2011 CHAPTER 13 Marketing Channels

  2. Learning Outcomes • LO 1 Explain what a marketing channel is and why intermediaries are needed LO 2 Define the types of channel intermediaries and describe their functions and activities LO 3 Describe the channel structures for consumer and business products and discuss alternative channel arrangements LO 4 Discuss the issues that influence channel strategy

  3. Learning Outcomes LO 5 Describe the different channel relationship types and their unique costs and benefits LO 6 Explain channel leadership, conflict, and partnering LO 7 Discuss channels and distribution decisions in global markets LO 8 Identify the special problems and opportunities associated with distribution in service organizations

  4. Marketing Channels Explain what a marketing channel is and why intermediaries are needed LO1

  5. Marketing Channels Marketing Channel: A set of interdependent organizations that ease the transfer of ownership as products move from producer to business user or consumer. LO1

  6. Specialization and division of labor Overcoming discrepancies Providing contact efficiency Marketing Channel Functions LO1

  7. Specialization and Division of Labor • Creates greater efficiency • Provides lower costs • Achieves economies of scale • Aids producers who lack resources to market directly • Builds good relationships with customers LO1

  8. Discrepancy of Quantity The difference between the amount of product produced and the amount an end user wants to buy. Discrepancy of Assortment The lack of all the items a customer needs to receive full satisfaction from a product or products. Overcoming Discrepancies LO1

  9. Temporal Discrepancy A situation that occurs when a product is produced but a customer is not ready to buy it. Spatial Discrepancy The difference between the location of a producer and the location of widely scattered markets. Overcoming Discrepancies LO1

  10. Providing Contact Efficiency LO1

  11. Channel Intermediaries Define the types of channel intermediaries and describe their functions and activities LO2

  12. Retailer A channel intermediary that sells mainly to customers. Merchant Wholesaler An institution that buys goods from manufacturers, takes title to goods, stores them, and resells and ships them. Agents and Brokers Wholesaling intermediaries who facilitate the sale of a product by representing channel members. Channel Intermediaries LO2

  13. Retailers Take Title to Goods Merchant Wholesalers Take Title to Goods Agents and Brokers Do NOT Take Title to Goods Channel Intermediaries LO2

  14. Sysco: Merchant Wholesaler Chefs, like any retailer, need large amounts of product inexpensively. Enter Sysco: with more than 400,000 items in their catalogue, Sysco inexpensively provides chefs what they need. From frozen prepared food to regionally grown produce, Sysco supplies fast food and high end hotels, and many restaurants between. Compare a 25 lb bag of Uncle Ben’s Converted Rice for $20.95 (84 cents/lb) to Amazon grocery’s $2.09 for a pound of the same rice, and it’s easy to see why Sysco dominates as the food wholesaler. http://www.youtube.com/watch?v=oAvQcYcvyaw&NR=1 http://www.youtube.com/watch?v=pEyASBCDLrY&feature=related Source: Boser, Ulrich. “Every Bite You Take: How Sysco came to monopolize mos of what you eat,” Slate.com, February 21, 2007. LO2

  15. Product characteristics Buyer considerations Market characteristics Factors Suggesting Type of Wholesaling Intermediary to Use LO2

  16. Factors Suggesting Type of Wholesaling Intermediary to Use LO2

  17. Contacting/Promotion TransactionalFunctions Negotiating Risk Taking Physically distributing Logistical Functions Storing Sorting FacilitatingFunctions Researching Financing Channel Functions Performed by Intermediaries LO2

  18. Logistics Logistics The process of strategically managing the efficient flow and storage of raw materials, in-process inventory, and finished goods from point of origin to point of consumption. LO2

  19. CHANNELINTERMEDIARIES CHANNELFUNCTIONS Retailers Wholesalers Agents and Brokers Perform Transactional Logistical Facilitating Channel Intermediaries and Functions LO2

  20. Channel Structures Describe the channel structures for consumer and business products and discuss alternative channel arrangements LO3

  21. Retailer Channel Wholesaler Channel Direct Channel Agent/Broker Channel Producer Producer Producer Producer Agents orBrokers Wholesalers Wholesalers Retailers Retailers Retailers Consumers Consumers Consumers Consumers Channels for Consumer Products LO3

  22. A distribution channel in which producers sell directly to consumers. Channels for Consumer Products Direct Channel LO3

  23. Agent/Broker IndustrialChannel Direct Channel Direct Channel IndustrialDistributor Agent/Broker Channel Producer Producer Producer Producer Producer Agents or Brokers Agents or Brokers IndustrialDistributor IndustrialDistributor Govt.Buyer IndustrialUser IndustrialUser IndustrialUser IndustrialUser Channels for Business Products LO3

  24. Companies drop the intermediary from the supply chain “Private exchanges” with select suppliers automate the supply chain http://www.sherwinwilliams.com Online Business-to-Business Exchanges on the Internet The Internet has forced traditional distributors to expand their model. http://www.evo.com/ LO3

  25. Multiple channels Nontraditional channels Strategic channel alliances Alternative Channel Arrangements LO3

  26. CONSUMERCHANNELS BUSINESSCHANNELS ALTERNATIVECHANNELS • Direct • Retail • Wholesaler • Agent/broker • Direct • Industrial • Agent/broker • Agent/brokerindustrial • Multiple • Nontraditional • Strategicalliances REVIEW LEARNING OUTCOME Channel Structures LO3

  27. Making Channel Strategy Decisions Discuss the issues that influence channel strategy LO4

  28. Factors Affecting Channel Choice Level ofDistributionIntensity Market Factors Intensive Distribution Product Factors Selective Distribution Producer Factors Exclusive Distribution Channel Strategy Decisions LO4

  29. Market FactorsThat Affect ChannelChoices Customer profiles Consumer or Industrial Customer Size of market Geographic location Market Factors LO4

  30. Product Complexity Product FactorsThat Affect ChannelChoices Product Price Product Standardization Product Life Cycle Product Delicacy Product Factors LO4

  31. Producer FactorsThat Affect ChannelChoices Producer Resources Number of Product Lines Desire for Channel Control Producer Factors LO4

  32. Intensive Exclusive A form of distribution aimed at having a product available in every outlet A form of distribution that established one or a few dealers within a given area Selective A form of distribution achieved by screening dealers to eliminate all but a few in any single area Levels of Distribution Intensity LO4

  33. Intensity Level Objective Number of Intermediaries Achieve mass marketselling. Convenience goods. Many Intensive Selective Work with selected intermediaries. Shopping and some specialty goods. Several Exclusive Work with singleintermediary. Specialty goods and industrial equipment. One Levels of Distribution Intensity LO4

  34. Types of Channel Relationships Describe the different channel relationship types and their unique costs and benefits LO5

  35. Types of Channel Relationships LO5

  36. Managing Channel Relationships Explain channel leadership, conflict, and partnering LO6

  37. Power Control Leadership Conflict Partnering Social Dimensions of Channels LO6

  38. Channel Power A channel member’s capacity to control or influence the behavior of other channel members Channel Control A situation that occurs when one marketing channel member intentionally affects another member’s behavior Channel Leader A member of a marketing channel that exercises authority/power over the activities of other members Channel Power, Control, and Leadership LO6

  39. Channel Conflict A clash of goals and methods between distribution channel members Channel Partnering The joint effort of all channel members to create a supply chain that serves customers and creates a competitive advantage Channel Conflict and Partnering LO6

  40. Channel Conflict Conflicts may occur if channel members: • Have conflicting goals • Fail to fulfill expectations of other channel members • Have ideological differences • Have different perceptions of reality LO6

  41. Transaction-Based Partnership-Based Short-term Adversarial Independent Price important Long-term Cooperative Dependent Value-added services Supplier / Manufacturer Relationships Number of Suppliers Information Sharing InvestmentRequired Many Minimal Minimal Few High High Channel Partnering LO6

  42. Channels and Distribution Decisions for Global Markets Discuss channels and distribution decisions in global markets LO7

  43. Channel structure and type differ Global Channel Development Gray marketing channels Channels and Distribution Decisions for Global Markets Distribute directly or through foreign partners Legal and infrastructure differences LO7

  44. Channels and Distribution Decisions for Services Identify the special problems and opportunities associated with distribution in service organizations LO8

  45. Distribution in Service Organizations LO8

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