13. Marketing Channels &
Supply Chains
1
Marketing Channels
• Move products from producers to
consumers
• Provide time, place, and possession utilities
to customers
• Can be direct (producer to end-use buyer) or
indirect (producer to intermediary(ies) to
end-use buyer)
2
Intermediary Roles
• Perform three basic functions, in which are
contained the eight marketing functions:
– Transactional function
• Buying, selling
– Logistical function
• Transporting and storing
– Facilitating function
• Gathering marketing information, standardization
and grading, risk taking, and financing
3
Channel Intermediaries
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Middleman
Wholesaler
Retailer
Agent
Broker
Distributor
Dealer
Manufacturer’s branches and offices
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Types of Marketing Channels
• Vertical marketing systems (VMSs):
– May involve forward or backward integration
• Types of VMS’s
– Corporate
– Administered
– Contractual: 3 types
• Wholesaler-sponsored voluntary chains
• Retailer cooperatives
• Franchise organizations: 3 types
– Manufacturer-sponsored retailer franchise
– Manufacturer-sponsored wholesaler franchise
– Service-firm-sponsored retailer franchise
5
Types of Marketing Channels
(Cont.)
• Horizontal marketing systems
– 2+ companies pool resources or programs to exploit
opportunity
– Symbiotic marketing
• Electronic marketing channels
• Multichannel marketing systems
– Single firm uses 2+ channels to reach different
customer segments
• E.g., dual distribution
– Benefits: increased market coverage, lower channel
cost, more customized selling
6
Channel Design Decisions
• Determine degree of target market coverage needed
– Types of intermediaries
– Distribution intensity
• Intensive
• Selective
• Exclusive
– Exclusive dealerships
– Closed sales territories
– Tying contracts
– Responsibilities of intermediaries
• Set channel objectives & determine constraints
– Market, product, company/organization, competition
7
Channel Conflict, Cooperation,
Competition
• Types of conflict
– Vertical channel, horizontal channel, multichannel (esp.
gray market)
• Causes of conflict
– Goal incompatibility, unclear roles/rights, perceptual
differences, dependence on manufacturer
• Managing conflict
– Adoption of super-ordinate goals, exchange of persons,
co-optation, joint membership in trade associations,
diplomacy/mediation/arbitration
8
Physical Distribution & Logistics
Management
• Supply chain
• Logistics management
– Customer service (analyze needs)
• Information, convenience, and support
– Order processing
– Inventory control
• Technology (esp. ERP & RFID)
• Vendor-managed inventory
– Materials handling—unitizing & containerization
– Warehousing
– Transportation
• Carriers, modes
• Goals of logistics management
– Minimize total logistics costs
– Create customer value delivery system
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