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Channel Decisions
Marketing channel -Performs the work of moving goods from
producers to consumers
- It overcomes the time, place and possession gaps that
separate goods and services from those who need or want
them
Merchants -buy, take title to and resell the merchandise
(wholesalers and retailers)
Agents search for customers and may negotiate on the
producers behalf but do not take title to the goods (brokers,
manufacturers representatives, sales agents)
Facilitators assist in the distribution process but neither take
title to goods nor negotiate purchases or sales (transport
companies, independent warehouses, banks, ad agencies)
Distribution Channel Function
1. Information
2. Transfer
3. Communication
4. Payments
5. Negotiation
6. Physical Distribution
7. Ordering
8. Risk Taking
9. Financing
Channel functions have 3 things in common:
1. They use scarce resources

2. Can be performed better by specialization

3. Can be shifted among channel members
Consumer Marketing Channels
0 level channel (manufacturer consumer)
1 level channel (manufacturer retailer- consumer)
2 level channel (mfg wholesaler-retailer- consumer)
3 level channel (mfg wholesaler-jobber-retailerconsumer)
Customers Desired Service Levels
1.Lot size -The number of units the channel permits
typical customer to purchase on one occasion.
2. Waiting time - The average time customers wait for
receipt of the goods
3. Spatial convenience -The degree to which the
channel makes it easy for customers to buy the product ;
More dealers, Market decentralization
4. Product variety - The assortment breadth provided
by the marketing channel
5. Service back-up add on services
Channel Management Decisions

Selecting
Training
Motivating
Evaluating
Feedback

Marketing System
1. Conventional Marketing System independent
producer, wholesaler and retailer
-each has separate business, no channel members has
complete or substantial control over the members
2. Vertical Marketing System producer, wholesaler
and retailer acting as a unified system.
The channel captain owns the other channels or
franchises them.
- seeks to eliminate channel conflict
3. Horizontal marketing system -Two or more
unrelated companies put together resources or
programs to exploit an emerging marketing opportunity.
4. Multichannel marketing system - A single firm uses
2 or more marketing channels to reach one or more
customer segments.
Causes of Channel Conflict
1.Incompatibility
2.Difference in Perception
3.Dependence
4. Unclear roles and rights delaers may encroach on
boundaries
5. Differences in perception

Legal and Channel issues

1. Exclusive dealing
2. Exclusive territories
3. Tying agreement
4. Dealers right
Managing Wholesaling and Retailing
Physical Distribution Concept
-All transporting, storing, product handling activities of a
business and a whole channel system should be coordinated
as one system that seeks to minimize the cost of distribution
for a given customer service level.

Four Levels of Retails Service

1.

Self-service -Cornerstone of all discount operations

-

customers are willing to carry out their own locatecompare-select process to save money

2. Self-selection - Customers find their own goods, although

they can ask for assistance , complete transaction by paying a
salesperson for the item
3.Limited-service - Carry more shopping goods and offer
services ;Customers need more information and assistance

Why ARE WHOLESALERS USED?

1.Mgt Service and advise; mft info; risk
bearing, financing, transporting, selling and
promotions, buyer and assorted admmiting
Bulk breaking, warehousing

4. Full-service - Salespeople are ready to assist in every

phase of the locate-compare-select process

Types of wholesaling

Classification of Retailers Type

1. Specialty Stores narrow product line deep assortment
2. Department stores wide variety of product lines
3. Supermarket wide variety of food laundry etc
4. Convenience stores limited line of high turnover
5. Discount store broad product line, low margin
6. Off-price retailer inexpensive , overruns
7. Superstores large assortment of routinely purchased food
8. Catalog Showroom broad selection
Types of NonStore Retailing
1. Direct Selling
2. Direct Marketing
3. Automatic Vending
4. Buying Services

Trends in Retailing
1.New retail forms and combinations continually emerge.
2. New retail forms are facing a shorter life span
3.Competition today is increasingly intertype or between
different types of stores
4. Todays retailers are moving toward one of 2 poles,
operating either as mass merchandisers or as specialty

retailers.
5. Supercenters that combine grocery items with a huge

selection of nonfood merchandise Marketing channels are

increasingly becoming professionally managed and
programmed. Bulk breaking
6.Technology is becoming critical as a competitive tool

There have been a marked rise in

establishments that provide a place for people
to congregate

1. Merchant wholesaler
-independently owned businesses that take title to the
merchandise
- Called jobbers, distributors or mill supply houses
Can be full service or limited service

2.Full-service wholesaler carry stock, maintain a

salesforce, offer credit,
Limited-service wholesalers
Offer fewer services to suppliers and customers
3.Provide a Targeted Level of Customer Service at the
Least Cost - Maximize Profits, Not Sales.
Logistics System;
1. cost , processing, (exam dw
2. Order processing
3. Transportation
4. Inventory
5. Warehousing
Transportation mode
1. Rail
2. Truck
3. Water
4. Pipeine
5. air
Checklist for choosinh taget modes
1. speed
2. devendqbility
3. Capability
4. Availability
5. cost