Week 5Week 5

Topic 2: Placement (Distribution)

Management

Distribution Channel

A set of independent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user.

Topic 2: Topic 2: Placement (Distribution) Placement (Distribution)

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Why are marketing intermediaries used? To provide economies To match demand and supply

Distribution channel functions: Information Promotion Contact Matching Negotiation Physical distribution Financing Risk taking

Topic 2: Topic 2: Placement (Distribution) Placement (Distribution)

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Channel level A layer of intermediaries that performs some work in

bringing the product and its ownership closer to the final buyer. Direct and indirect marketing channels

All of the institutions in the channel are connected by several types of flows: Physical flow of product The flow of ownership The payment flow The information flow The promotion flow

Topic 2: Topic 2: Placement (Distribution) Placement (Distribution)

ManagementManagement

Channel conflict Disagreement among marketing channel members on

goals and roles. Horizontal conflict Vertical conflict

Channel behaviour

Topic 2: Topic 2: Placement (Distribution) Placement (Distribution)

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Types of Marketing Channels Vertical marketing system1. Corporate VMS2. Contractual VMS

Wholesaler-sponsored voluntary chains Retailer cooperatives Franchise organizations

1. Manufacturer-sponsored retailer franchise system2. Manufacturer-sponsored wholesaler franchise system3. Service firm-sponsored retailer franchise system

3. Administered VMS

Topic 2: Topic 2: Placement (Distribution) Placement (Distribution)

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Horizontal marketing system A channel arrangement in which two or more companies at

one level join together to follow a new marketing opportunity.

Topic 2: Topic 2: Placement (Distribution) Placement (Distribution)

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Types of Marketing Channels (cont.)

Multichannel distribution system

Changing channel organization Disintermediation

Topic 2: Topic 2: Placement (Distribution) Placement (Distribution)

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Hybrid Marketing Channel

1. Analyzing consumer service needs2. Setting channel objectives and constraints3. Identifying major alternatives

Types of intermediaries (sales force, manufacturer’s agency, industrial distributors)

Number of marketing intermediaries (Intensive, selective and exclusive distribution)

4. Evaluating the major alternatives Economic criteria Control issue Adaptive criteria

Topic 2: Topic 2: Placement (Distribution) Placement (Distribution)

ManagementManagement

Channel Design Decisions

Thank You!