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    Distribution

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    SHREYASH DESHPANDE
    1) Marketing channels, also called distribution channels, involve sets of interdependent organizations that make a product available for consumption. They can include merchants, agents, and facilitators. 2) Channel members provide information, marketing communications, financing, risk management, storage, and transfer of ownership as products move from producer to consumer. 3) Channels can involve one to multiple levels of intermediaries between producer and end user, and producers use various types of power and incentives to motivate cooperation among channel members.

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    Distribution

    Uploaded by

    SHREYASH DESHPANDE
    20 views11 pages
    1) Marketing channels, also called distribution channels, involve sets of interdependent organizations that make a product available for consumption. They can include merchants, agents, and facilitators. 2) Channel members provide information, marketing communications, financing, risk management, storage, and transfer of ownership as products move from producer to consumer. 3) Channels can involve one to multiple levels of intermediaries between producer and end user, and producers use various types of power and incentives to motivate cooperation among channel members.

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    1) Marketing channels, also called distribution channels, involve sets of interdependent organizations that make a product available for consumption. They can include merchants, agents, and facilitators. 2) Channel members provide information, marketing communications, financing, risk management, storage, and transfer of ownership as products move from producer to consumer. 3) Channels can involve one to multiple levels of intermediaries between producer and end user, and producers use various types of power and incentives to motivate cooperation among channel members.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    20 views11 pages

    Distribution

    Uploaded by

    SHREYASH DESHPANDE
    1) Marketing channels, also called distribution channels, involve sets of interdependent organizations that make a product available for consumption. They can include merchants, agents, and facilitators. 2) Channel members provide information, marketing communications, financing, risk management, storage, and transfer of ownership as products move from producer to consumer. 3) Channels can involve one to multiple levels of intermediaries between producer and end user, and producers use various types of power and incentives to motivate cooperation among channel members.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 11

    Designing and Managing

    Integrated Marketing
    Channels
    Marketing Channels/distribution channel
    • Marketing channels are sets of interdependent organizations
    participating in the process of making a product or service available
    for use or consumption.
    • Most producers do not sell their goods directly to the final users;
    between them stands a set of intermediaries performing a variety of
    functions.
    • These intermediaries constitute a marketing channel (also called a
    trade channel or distribution channel).
    Marketing Channels
    • Merchants: Intermediaries such as wholesalers and retailers—buy,
    take title to, and resell the merchandise; they are called merchants.
    • Agents: Brokers, manufacturers’ representatives, sales agents—
    search for customers and may negotiate on the producer’s behalf but
    do not take title to the goods; they are called agents.
    • Facilitators: Transportation companies, independent warehouses,
    banks assist in the distribution process but neither take title to goods
    nor negotiate purchases or sales; they are called facilitators.
    Channel Member Functions
    • Provide information about potential and current customers, competitors, and
    other actors and forces in the marketing environment.
    • Develop and disseminate persuasive communications to stimulate
    purchasing.
    • Negotiate and reach agreements on price and other terms so that transfer of
    ownership or possession can be affected.
    • Acquire the funds to finance inventories at different levels in the marketing
    channel.
    • Assume risks connected with carrying out channel work.
    • Provide for the successive storage and movement of physical products.
    • Oversee actual transfer of ownership from one organization or person to
    another.
    Channel Functions and Flows
    Channel Levels: Consumer Marketing
    • A one-level channel contains one
    selling intermediary, such as a
    retailer. A two-level channel contains
    two intermediaries, typically a
    wholesaler and a retailer, and a
    three-level channel contains three.
    In the meatpacking industry,
    wholesalers sell to jobbers,
    essentially small-scale wholesalers,
    who sell to small retailers.
    • Obtaining information about end
    users and exercising control become
    more difficult for the producer as
    the number of channel levels
    increases.
    Channel Levels: Industrial Marketing
    • An industrial-goods manufacturer
    can use its sales force to sell
    directly to industrial customers, or
    it can sell to industrial distributors
    who sell to industrial customers, or
    it can sell through manufacturer’s
    representatives or its own sales
    branches directly to industrial
    customers or indirectly to industrial
    customers through industrial
    distributors.
    • Zero-, one-, and two-level
    marketing channels are quite
    common.
    Reverse-flow channels
    • Channels normally describe a forward movement of products from
    source to user, but reverse-flow channels are also important
    (1) to reuse products or containers (such as refillable LPG),
    (2) to refurbish products for resale (such as circuit boards or computers),
    (3) to recycle products, and
    (4) to dispose of products
    • Reverse-flow intermediaries include manufacturers’ redemption centers,
    community groups, trash-collection specialists, recycling centers, trash-
    recycling brokers.
    Motivating Channel Members
    Constant training, supervision & encouragement. Producers can draw on the
    following types of power to elicit cooperation:
    • Coercive power: Manufacturer threatens to withdraw a resource or
    terminate a relationship if intermediaries fail to cooperate.
    • Reward power: Manufacturer offers intermediaries extra benefits for
    performing specific acts.
    • Legitimate power: Manufacturer requests a behavior that is warranted by
    the contract.
    • Expert power: Manufacturer has special knowledge that the intermediaries
    value.
    • Referent power: Intermediaries are proud to be identified with the
    manufacturer
    Channel Integration: Vertical
    Marketing Systems (VMS)
    • Producer, wholesaler(s) & retailer(s) act as a unified system. Can
    be dominated by any of the three members of the system.
    • VMS arose as a result of strong channel members’ attempts to
    control channel behavior & eliminate the conflict that results
    when independent channel members pursue their own
    objectives.

    3 types of VMS:
    Corporate VMS: Combines successive stages of production &
    distribution under single ownership.
    Administered VMS: Coordinates successive stages of
    production & distribution through the size & power of one of
    members
    Contractual VMS: Independent firms at different levels of
    production & distribution integrating their programs on a
    contractual basis to obtain more economies &/or sales
    impact than they could achieve alone.
    Channel Cooperation, Conflict & Competition
    Types of conflict & competition
    • Vertical channel conflict exists when there is conflict between different
    levels within the same channel.
    • Horizontal channel conflict exists when there is conflict between members
    at the same level within the channel.
    • Multichannel conflict exists when the manufacturer has established two or
    more channels that compete with each other in selling to the same market.
    Causes of Channel Conflict
    • Goal incompatibility
    • Unclear roles & rights
    • Differences in perception
    • Intermediaries’ great dependence on the manufacturer

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