Chapter 3 channel structure
length
intensity
breadth
organizational
structure
0 -channels
Exclusive
distribution
single
Traditional
distribution system
One-level
channel
Selective
distribution
multiple
Vertical distribution
system
Two channels
Intensive
distribution
Three channels
Horizontal distribution
system
Section 1 length structure
一. zero-channel (direct channel, short channel)
1. meaning
2. characteristics
 In zero-Channels, there are only manufacturers and users,
but no middleman.
 Commodities belong to manufactures before sale.
 Ownership of goods transfer from producers to users
through only one time.
 Manufacturers Possess all of sales revenue and profits.
 3.
With regard to direct selling
 1886年，雅芳公司在美国创造性地通过“雅芳小姐”
以单层次直销方式销售香水，展开了现代直销史的
篇章。1945年纽崔莱公司发展出多层次直销“团队
计酬”的奖金制度，多层次直销开始渐成风尚。上
世纪90年代初，直销模式引入中国 。（1990年11月，
美国雅芳公司经中国广州市人民政府批准，投资
2795万美元与广州化妆品厂合资成立广州雅芳有限
公司 ）.
 Basic
characteristics：
 1：It is sale person to person or face to face, which
distinguishes it from direct marketing.
 2：Usually the sale is not accomplished in stores, which
excludes direct selling in store.
 Conclusion
Direct sale is the form of non-store selling, including
direct selling、 direct marketing.
The direct selling includes two schemes : the singlelevel and multi-level marketing; the latter is known as
pyramid selling in our country .
 Discussion:
Direct selling = Direct channels?
There is a widely spread but not right opinion; that is
putting direct marketing the same as direct channel.
In fact, direct sale Does not mean direct channel.
Direct channels are compared with the indirect channels,
while direct sale is a form of non-store marketing;
Direct sale can be in direct channels (such as
personal selling), as well as indirect channels (such as a
cosmetics firm commissioned a direct-sales company
selling ).
4. emerging conditions
5. advantages analysis:
 Advantage: Realizing the integration of developmental
strategy; easy to control; strengthen serves ;
 Shortcoming: Does not suit products widespread retailing;
increasing expense ; decentralizing energy.
 case：Honda
、Amway、 DELL
二 indirect channels
1. The meaning ,pattern and characteristics
2. Advantage Analysis
 Focus on resources of production;
 simplify transactions, extensive distribution;
 Super services, risk-sharing.
3. Disadvantage analysis
 difficult
to communicate information directly
 heavy burden on consumers ;
 market instability, difficult to control
Examples: mobile, Wahaha
厂商----全国总代----二级代理---零售----用户
 CDMA/GPRS:
厂商----运营商---自有代理体系----用户
 GSM:
 1987年
14万 4分冰棒；
 1989年营养食品厂；1991年集团
 分销的三个阶段
 “联销体”的运行模式
 价差、区域、品种和节奏
Section 2 breadth structure
1. Exclusive distribution
 Meaning: The manufacturer， at a certain place，selects
only a intermediate institution（between the same type）
to carry out the distribution of merchandise.
 Advantages:
easy to control,
low-cost promotion.
 Disadvantages :
lack of competition,
low market coverage,
Over dependence.
case：志高
 维修到1998年
 公司---省级总代理---批发---零售
 成员分工：分销、促销、售后服务
2. Selective distribution
 Advantages: easier to control, greater market coverage.
 Problem: difficult to select brokers, fierce competition
Case: Nike
 3.
Intensive distribution
 Advantages: great market coverage、 high rate of
customer contacts, making full use of middlemen.
 problems: difficult to control、high-cost and intensive
competition
Coca cola's channel
一、target market
二、distribution goal
3A:
3P:
 Availability
Pervasive
 Affordability
Price to value
 Acceptability
Preferred
三、distribution channel
 Head office---中国控股、嘉里、太古、中粮-----operation office---retailers（ 22 channels）
Breadth comparison
category
Distributor Market
s amount
coverag
e
compet control
ition
Suitable products
exclusive
single
small
weak
strong
Special or new
products
selective limited
middle
Relativ
ely
fierce
Relative Selective goods
ly strong
intensiv multiple
e
broad
fierce
strong
daily necessities
Section 3 the breadth
1. meaning
 In
addition to choosing which type of intermediary to use
and how many of them to use, the channel manager must
also decide whether to operate one or multiple channels in
a market. Whenever more than one channel coexists in a
market, that is dual distribution.
Advantages:
 an increase of market coverage;
 lower channels cost;
 customers customized sales.
Problem: more than two channels, easy to reach conflict.
Conflict resolution 1: customer
segmentation (P121)
Conflict resolution 2: product
segmentation
Conflict
resolution 3: integration
Enterprise goal and channel selection
length
breadth
direct indire
ct
concentricity
Max sale
√
Mix cost
√
broadness
selectivity intensit
y
Simplific
-ation
√
√
√
√
Best
√
reputation
√
√
√
√
√
Strongest
control
√
Highest
stock ratio
Mix
conflicts
√
√
√
diversificati
on
√
√
Section 4 organization (system) structure
1. Traditional channel system
 this structure is also called loose-type channel.
 The
Channel is formed by various independent members;
each member pursues the maximization of their profits; no
member have full or adequate control over the other
members.
 Commonly
used by small and medium enterprises.
 2.

vertical channel system
It is an unified coalition created by the producers
wholesalers and retailers through property rights, contracts,
etc. In this system ,each member is a part of the entire
system. Includes three forms:
Vertical system
Corporate
model
Contract
model
Management
model
Franchised
operating
organization
Wholesaler
chain
Retail
cooperator
2.1 vertical marketing system of Company
Also known as the “rigid” integration or vertical
integration organizations.
 Refers to a company owning and controlling a number of
manufacturing、wholesale and retail organizations;
controlling a number of flows and even all the flows of
the distribution; operating and unifying management of
production, wholesale and retail business.
 There are property rights links.
Case: Haier, Suning
2.2 Vertical marketing system of contract
 an
integration organization of “flexibility”!
 Type:
• Voluntary Chain
• retail co-operation
• Franchise
 2.3
 An
vertical marketing system of Management
integrated organization of “flexibility”
 refers to channel relations : big company or minority
namely several strengths with the good brand prestige
depending upon own influence, gather the numerous
distributors through the powerful management.
 The characteristic is: A core、stable relation、 consistent
goal、 social resource use.
 Case: P&G Wal-Mart
3. Horizontal marketing system
 Two
or more non-associated companies integrate their
resources or programs to develop a marketing opportunity.
 Adler
said : it is symbiotic marketing.