Lamb, Hair, McDaniel
2012-2013
Copyright ©2013 by Cengage Learning Inc. All rights reserved 1

2
1
2
3
4
Explain what a marketing channel is and why intermediaries are needed
Define the types of channel intermediaries and describe their functions and activities
Describe the channel structures for consumer and business products and discuss alternative channel arrangements
Discuss the issues that influence channel strategy
© 2013 by Cengage Learning Inc. All rights reserved

3
5
6
7
8
Describe the different channel relationship types and their unique costs and benefits
Explain channel leadership, conflict, and partnering
Discuss channels and distribution decisions in global markets
Identify the special problems and opportunities associated with distribution in service organizations
© 2013 by Cengage Learning Inc. All rights reserved

1
Explain what a marketing channel is and why intermediaries are needed
© 2013 by Cengage Learning Inc. All rights reserved 4

5
A Marketing Channel is… a set of interdependent organizations that eases the transfer of ownership as products move from producer to business user or consumer.
© 2013 by Cengage Learning Inc. All rights reserved
1

6
Marketing Channel Functions
Specialization and division of labor
Overcoming discrepancies
Providing contact efficiency
© 2013 by Cengage Learning Inc. All rights reserved
1

7
Specialization and
Division of Labor
 Creates greater efficiency
 Provides lower production costs
 Achieves economies of scale
 Aids producers who lack resources to market directly
 Builds good relationships with customers
© 2013 by Cengage Learning Inc. All rights reserved
1

8
Overcoming Discrepancies
Discrepancy of
Quantity
Discrepancy of
Assortment
The difference between the amount of product produced and the amount an end user wants to buy.
The lack of all the items a customer needs to receive full satisfaction from a product or products.
1
© 2013 by Cengage Learning Inc. All rights reserved

Overcoming Discrepancies
9
Temporal
Discrepancy
Spatial
Discrepancy
A situation that occurs when a product is produced but a customer is not ready to buy it.
The difference between the location of a producer and the location of widely scattered markets.
1
© 2013 by Cengage Learning Inc. All rights reserved

10
Exhibit 13.1
How Marketing Channels Reduce the Number of Required Transactions
© 2013 by Cengage Learning Inc. All rights reserved

Define the types of channel intermediaries and describe their functions and activities
2
© 2013 by Cengage Learning Inc. All rights reserved 11

12
Retailer
A channel intermediary that sells mainly to customers.
Merchant
Wholesaler
Agents and
Brokers
An institution that buys goods from manufacturers, takes title to goods, stores them, and resells and ships them.
Wholesaling intermediaries who facilitate the sale of a product by representing channel members.
2
© 2013 by Cengage Learning Inc. All rights reserved

13
Retailers
Merchant
Wholesalers
Agents and
Brokers
Take Title to Goods
Take Title to Goods
Do NOT Take Title to Goods
2
© 2013 by Cengage Learning Inc. All rights reserved

14
Factors Suggesting Type of
Wholesaling Intermediary to Use
Product characteristics
Buyer considerations
Market characteristics
© 2013 by Cengage Learning Inc. All rights reserved
2

15
Factors Suggesting Type of
Wholesaling Intermediary to Use
Factor
Nature of product
Complexity of product
Product’s gross margin
Frequency of ordering
Time between order and receipt of shipment
Number of buyers
Concentration of buyers
Merchant
Wholesalers
Standard
Agents/ Brokers
Nonstandard, custom
Complex Simple
High
Frequent
Low
Infrequent
Shorter lead time Longer lead time
Many
Dispersed
Few
Concentrated
2
© 2013 by Cengage Learning Inc. All rights reserved

16
Channel Functions
Performed by Intermediaries
Transactional
Functions
Contacting/Promotion
Negotiating
Risk Taking
Logistical
Functions
Physically distributing
Storing
Sorting
Facilitating
Functions
Researching
Financing
© 2013 by Cengage Learning Inc. All rights reserved
2

17
Logistics
The efficient and costeffective forward and reverse flow and storage of goods, services, and related information, into through, and out of channel member companies.
© 2013 by Cengage Learning Inc. All rights reserved
2

18
Channel Intermediaries and
Functions
CHANNEL
INTERMEDIARIES
Retailers
Wholesalers
Agents and Brokers
Perform
CHANNEL
FUNCTIONS
Transactional
Logistical
Facilitating
© 2013 by Cengage Learning Inc. All rights reserved
2

3
Describe the channel structures for consumer and business products and discuss alternative channel arrangements
© 2013 by Cengage Learning Inc. All rights reserved 19

20
Exhibit 13.3
Marketing Channels for Consumer Products
© 2013 by Cengage Learning Inc. All rights reserved

21
Direct
Channel
A distribution channel in which producers sell directly to consumers.
© 2013 by Cengage Learning Inc. All rights reserved
3

22
Exhibit 13.4
Channels for Business and Industrial
Products
© 2013 by Cengage Learning Inc. All rights reserved

23
The Internet has forced traditional distributors to expand their model.
Companies drop the intermediary from the supply chain
“Private exchanges” with select suppliers automate the supply chain
3
© 2013 by Cengage Learning Inc. All rights reserved

24
Multiple channels
Nontraditional channels
Strategic channel alliances
© 2013 by Cengage Learning Inc. All rights reserved
3

Making Channel Strategy Decisions
4
Discuss the issues that influence channel strategy
© 2013 by Cengage Learning Inc. All rights reserved 25

26
Factors
Affecting
Channel
Choice
Market Factors
Product Factors
Producer Factors
Level of
Distribution
Intensity
Intensive Distribution
Selective Distribution
Exclusive Distribution
4
© 2013 by Cengage Learning Inc. All rights reserved

27
Customer profiles
Consumer or Industrial
Customer
Market
Factors
That Affect
Channel
Choices
Size of market
Geographic location
4
© 2013 by Cengage Learning Inc. All rights reserved

28
Product Complexity
Product Price
Product
Factors
That Affect
Channel
Choices
Product Standardization
Product Life Cycle
Product Delicacy
4
© 2013 by Cengage Learning Inc. All rights reserved

29
Producer Resources
Number of Product Lines
Producer
Factors
That Affect
Channel
Choices
Desire for Channel Control
© 2013 by Cengage Learning Inc. All rights reserved
4

30
Intensive
Selective
Exclusive
A form of distribution aimed at having a product available in every outlet
A form of distribution achieved by screening dealers to eliminate all but a few in any single area
A form of distribution that established one or a few dealers within a given area
4
© 2013 by Cengage Learning Inc. All rights reserved

31
Intensity
Level
Objective
Number of
Intermediaries
Intensive
Achieve mass market selling.
Convenience goods.
Many
Selective
Exclusive
Work with selected intermediaries.
Shopping and some specialty goods.
Work with single intermediary. Specialty goods and industrial equipment.
Several
One
4
© 2013 by Cengage Learning Inc. All rights reserved

5
Describe the different channel relationship types and their unique costs and benefits
© 2013 by Cengage Learning Inc. All rights reserved 32

33
Arm’s Length
Relationship
Cooperative
Relationship
Integrated
Relationship
Types of Channel
Relationships
Benefits Hazards
Fulfills a one time or unique need; low involvement/risk
Formal contract without capital investment/long-term commitment; “happy medium”
Closely bonded relationship; explicitly defined relationships
Parties unable to develop relationship; low trust level
Some parties may need more relationship definition
High capital investment; any failure could affect every channel member
5
© 2013 by Cengage Learning Inc. All rights reserved

6
Explain channel leadership, conflict, and partnering
© 2013 by Cengage Learning Inc. All rights reserved 34

35
Power
Control
Leadership
Conflict
Partnering
6
© 2013 by Cengage Learning Inc. All rights reserved

36
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
6
© 2013 by Cengage Learning Inc. All rights reserved

37
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
© 2013 by Cengage Learning Inc. All rights reserved
6

Channel Partnering (Channel
Cooperation) is… the joint effort of all channel members to create a channel that serves customers and creates a competitive advantage.
38
By COOPERATING, channel members can speed up inventory replenishment, improve customer service, and reduce the total costs of the marketing channel.
6
© 2013 by Cengage Learning Inc. All rights reserved

7
Discuss channels and distribution decisions in global markets
© 2013 by Cengage Learning Inc. All rights reserved 39

40
Channels and Distribution
Decisions for Global Markets
Channel structure and type differ
Global Channel
Development
Gray marketing channels
Distribute directly or through foreign partners
7
© 2013 by Cengage Learning Inc. All rights reserved

8
Identify the special problems and opportunities associated with distribution in service organizations
© 2013 by Cengage Learning Inc. All rights reserved 41

42
Distribution in Service Organizations
Minimizing wait times is a key factor in maintaining service quality.
Managing service capability is critical to successful service distribution.
Improving service delivery makes it easier and more convenient for consumers to use the service.
Standardizing services across regions gives customers quality service wherever that service is consumed.
© 2013 by Cengage Learning Inc. All rights reserved
8

43
Taza Chocolate
Taza, a premium chocolate, sells its chocolate in boutiques and premium grocery stores. The various channels depend largely on personal selling, working with retailers, and strong relationships with wholesalers who are willing to distribute the premium, delicate product.
http://www.cengage.com/marketing/book_content/
9781133190110_lamb/videos/ch13.html
© 2013 by Cengage Learning Inc. All rights reserved