adbms disrtribution channel.ppt

7/29/2019 adbms disrtribution channel.ppt

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Marketing Or

Distribution

Channels


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10-2

Marketing or Distribution

Channel

A set of interdependentorganizations involved in theprocess of making a product or

service available for use orconsumption by the consumer orbusiness user.


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10-3

Why Use Marketing

Intermediaries?

Selling through wholesalers

and retailers usually is muchmore efficient and costeffective than direct sales


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10-4

Why are Marketing

Intermediaries Used? Greater efficiency in making goods

available to target markets.

Contacts

Experience

SpecializationScale of operation

Match supply and demand.


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10-5

Distribution Channel Functions

Information:gathering anddistributing marketing researchand intelligence information about

the marketing environment Promotion:developing and

spreading persuasivecommunications about an offer


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10-6


Contact:finding andcommunicating with prospectivebuyers

Matching:shaping and fitting theoffer to the buyers needs,

including such activities asmanufacturing, grading,assembling, and packaging


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Negotiation:agreeing onprice and other terms of the

offer so that ownership orpossession can be transferred

Physical distribution:transporting and storing goods


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Financing:acquiring and usingfunds to cover the costs of

channel work Risk taking:assuming

financial risks such as theinability to sell inventory at fullmargin


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Number of Channel Levels

Channel level can be describedas distribution channels

Direct marketing channel

Retailer

Wholesaler


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Consumer and Business Channels


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Channel Behavior

Channel members are dependentupon one another and must worktogether for the channel to operate

successfullyMembers should understand and

accept their roles, coordinate their

goals and activities, and cooperateto attain overall channel goals


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Channel Behaviour The channel will be most effective when:

each member is assigned tasks itcan do best.

all members cooperate to attainoverall channel goals.

If this does not happen, conflict occurs: Horizontal Conflictoccurs among firms at the

same level of the channel (e.g., retailer to retailer).

Vertical Conflictoccurs between different levelsof the same channel (e.g., wholesaler to retailer).

.

The channel will be most effective when

each member is assigned tascan do best.

all members cooperate to att

overall channel goals. If this does not happen, conflict occurs:

Horizontal Conflictoccurs among firms a

same level of the channel (e.g., retailer to r


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Conventional vs. Vertical Marketing System


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Channel Organization

A vertical marketing system(VMS) consists of producers,wholesalers, and retailers acting as a

unified systemOne channel member either owns

the others, has contracts with them,or wields so much power that theyall cooperate


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Vertical Marketing SystemsCorporate VMS combines

successive stages of production anddistribution under single

ownershipAdministered VMS coordinatessuccessive stages of production and

distribution through the size andpower of the parties


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Contractual VMS consists ofindependent firms at differentlevels of production and

distribution who join throughcontracts to obtain economies osales impact


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Corporate VMS

Common Ownership at DifferentLevels of the Channel (e.g., Sears)

Contractual VMSContractual Agreements Among

Channel Members (e.g., ACE Hardware)

Administered VMSLeadership is Assumed by One or

a Few Dominant Members (e.g., Kraft)

Types of Vertical Marketing Systems

Control

High

Low


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Innovations in Marketing Systems

Two or morecompanies at onechannel level jointogether to follow a

new marketingopportunity.

Example: Banks in

grocery stores

A single firm sets up

two or moremarketing channelsto reach one ormore customer

segments.

Example: Retailersand catalogs

Horizontal MarketingSystem

Hybrid or multi channel

Marketing System


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Channel Organization

Alliances are developed to allow twoorganizations to benefit from each othersstrengths

Horizontal marketing systems aretwo or more companies at one level that

join to follow a new marketingopportunity

Multichannel marketing occurs whena single firm sets up two or moremarketing channels to reach one or more

customer segments

Ch l D i D i i


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Channel Design Decisions

Analyzing Consumer Service Needs

etting Channel Objectives & Constraints

Exclusive

Distribution

Selective

Distribution

Intensive

Distribution

Identifying Major Alternatives

Evaluating the Major Alternatives


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Channel Management

Decisions

Selecting

Motivating

Evaluating

FEEDB

ACK


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10-23

Number of Intermediaries

Intensive distribution

Exclusive distribution

Selective distribution


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10-24

Franchising

Granting the right to engage inoffering, selling, or distributinggoods or services under a

marketing format which is designedby the franchisor

The franchisor permits thefranchisee to use its trademark,name, and advertising


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10-25

Franchisee Advantages

Brand NameMarketing

Support

Plans and

Systems

Reservation systems-

Customers

Contracts

2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th editionUpper Saddle River, NJ 07458 Kotler, Bowen, and Makens


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Franchisee Disadvantages

Value of brand name determinedby franchiser

Introduction of new productsdetermined by franchiser

Your reliability tied to the rest ofthe system


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10-27

Selecting Channel Members

Attracting Channel MembersEvaluating Major Channel

AlternativesEconomic Feasibility of the

Channel Member

Control CriteriaCustomer Needs


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Table : Factors Influencing Marketing Channel Strategies

StandardizedComplex

DurablePerishableProductfactors

s

Little technical

knowledge and no

regular servicing

Extensive technical

knowledge and regular

servicing required

Geographically diverseGeographically

concentrated

ConsumersBusiness usersMarket

factors

Characteristics of

Long Channels

Characteristics of

Short Channels

. . .

adbms disrtribution channel.ppt

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