Distribution Channel or Marketing Channel

Set of firms and individuals that take title, or assist in transferring title, to the particular good or service as it moves from the producer to the consumer.

Number of Channel Levels

Zero-level Channel Direct Marketing One-level Channel Consumer Markets Retailer Organisational Markets Sales Agent or Broker Two-level Channels Consumer Markets - Wholesaler / Retailer Organisational Markets Industrial Distributor / Dealers Multiple-levels Complex

Channel Flows
Physical Flow
Title Flow

Payment Flow
Information Flow Promotion Flow

Managing Channel Relationships

Channel Power Channel Control

Social Dimensions of Channels

Channel Leadership Channel Conflict Channel Partnering

Channel Power
A channel members 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 members behavior

Channel Leader
A member of a marketing channel that exercises authority/power over the activities of other members, also referred to as the Channel
Captain

Channel Conflict
A clash of goals and methods between distribution channel members
Horizontal

Conflict

Occurs among channel members on the same level

Vertical

Conflict

Occurs among channel members at different levels

Channel Partnering
The joint effort of all channel members to create a supply chain that serves customers and creates a competitive advantage.

Channel Organisation
Conventional Marketing Systems
Highly

fragmented networks in which loosely aligned manufacturers, wholesalers and retailers have bargained with each other at arms length, negotiated aggressively over teams of sale, and otherwise behaved autonomously. entity seeks to maximise its own profits, even at the expense of maximising the profits for the system as a whole.

Each

Channel Organisation
Vertical Marketing Systems

Professionally managed and centrally programmed networks, pre-engineered to achieve operating economies and maximum market impact

Channel Design Decisions

Customer Characteristics
Product Characteristics Middlemen Characteristics Competitive Characteristics Company Characteristics Environmental Characteristics

Number of Intermediaries
Intensive Distribution
Exclusive Distribution Selective Distribution

Terms & Responsibilities of Intermediaries

Price Policy
Conditions of Sale

Territorial Rights
Mutual Services & Responsibilities

Motivating the Channel Members

Co-operation Partnership Distribution Programming

Physical Distribution or Logistics

The planning, implementation, and control of the flow of materials and final goods from points of origin to points of use to meet the needs of customers at a profit.

Objective of Physical Distribution

Getting the right goods to the right places at the right time for the least cost.

Physical Distribution Decisions

Order Processing Warehousing Inventory Transportation

Wholesaling
All activities involved in selling goods and services to those buying for resale or business use.

Retailing
All business activities involved with the sale of goods and services to the final consumer for personal, family or household use.

Wholesaler & Retailer Marketing Decisions

Target Market Decisions

Product Assortment, Services &

Atmospherics Decision Price Decision Promotion Decision Place Decision

Wholesaler Types
Merchant Wholesaler An institution that buys goods from manufacturers, takes title to goods, stores them, and resells and ships them. Agents and Brokers Wholesaling intermediaries who facilitate the sale of a product by representing channel member.

Types of Wholesalers
Merchant Wholesaler
Independently Owned Business that Takes Title to the Merchandise it Handles.

Brokers/ Agents
They Dont Take Title to the Goods, and They Perform Only a Few Functions.

Manufacturers Sales Branches and Offices

Wholesaling by Sellers or Buyers Themselves Rather Than Through Independent Wholesalers.

Wholesalers Functions
Selling and
Warehousing Transportation Financing Risk bearing Market

promoting Buying and assortment building Bulk breaking

information

Different Ways to Classify Retail Outlets

Amount of Service Product Line Sold Relative Price Emphasis Nature of Business Premises

Control of Outlets
Type of Store Cluster

Wheel of Retailing
The lifecycle of retailers, moving from an entry position with low prices to gain market share to eventually moving upscale with higher-quality products aimed at more affluent consumers.

The Wheel of Retailing

With time, outlet adds still more services
2. Outlet now has: Higher prices Higher margins Higher status 3. Outlet now has: Still higher prices Still higher margins Still higher status

As time passes, outlet adds services

1. Outlet starts with: Low prices Low margins Low status

Passage of time

4. New form of outlet

enters retailing environment with characteristics of

outlet in Box 1