Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1 Lamb, Hair, McDaniel...

Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1

Lamb, Hair, McDaniel

CHAPTER 13

Marketing Channels

© E

IGH

TF

ISH

/Sto

ne/G

etty

Im

ages


Marketing Channels

LO1

a set of interdependent organizations that eases the transfer of ownership as products move from producer to business user or consumer.

A Marketing Channel is…


Marketing Channel Functions

Specialization and division of labor Specialization and division of labor

Overcoming discrepancies Overcoming discrepancies

Providing contact efficiency Providing contact efficiency

LO1


Specialization and Division of Labor

Creates greater efficiency

Provides lower production costs

Achieves economies of scale

Aids producers who lack resources to market directly

Builds good relationships with customers

LO1


Overcoming Discrepancies

Discrepancyof

Quantity

Discrepancyof

Quantity

Discrepancyof

Assortment

Discrepancyof

Assortment

The difference between the amount of product produced and the amount an end user

wants to buy.

The difference between the amount of product produced and the amount an end user

wants to buy.

The lack of all the items a customer needs to receive full satisfaction from a product or

products.

The lack of all the items a customer needs to receive full satisfaction from a product or

products.

LO1


Overcoming Discrepancies

TemporalDiscrepancyTemporal

Discrepancy

SpatialDiscrepancy

SpatialDiscrepancy

A situation that occurs when a product is produced but a

customer is not ready to buy it.

A situation that occurs when a product is produced but a

customer is not ready to buy it.

The difference between the location of a producer and the

location of widely scattered markets.

The difference between the location of a producer and the

location of widely scattered markets.

LO1


LO1

Exhibit 13.1Exhibit 13.1How Marketing Channels Reduce the How Marketing Channels Reduce the Number of Required TransactionsNumber of Required Transactions


Channel Intermediaries

RetailerRetailer A channel intermediary that sells mainly to customers.

A channel intermediary that sells mainly to customers.

MerchantWholesalerMerchant

Wholesaler

An institution that buys goods from manufacturers, takes title

to goods, stores them, and resells and ships them.

An institution that buys goods from manufacturers, takes title

to goods, stores them, and resells and ships them.

Agents andBrokers

Agents andBrokers

Wholesaling intermediaries who facilitate the sale of a product by representing channel members.

Wholesaling intermediaries who facilitate the sale of a product by representing channel members.

LO2


Channel Intermediaries

RetailersRetailers

Merchant WholesalersMerchant

Wholesalers

Agents and

Brokers

Agents and

Brokers

Take Title to GoodsTake Title to Goods

Take Title to GoodsTake Title to Goods

Do NOT Take Title to GoodsDo NOT Take Title to Goods

LO2


Factors Suggesting Type of Wholesaling Intermediary to Use

Product characteristicsProduct characteristics

Buyer considerationsBuyer considerations

Market characteristicsMarket characteristics

LO2


Factors Suggesting Type of Wholesaling Intermediary to Use

Factor Merchant Wholesalers

Agents/ Brokers

Nature of product Standard Nonstandard, custom

Complexity of product Simple Complex

Product’s gross margin High Low

Frequency of ordering Frequent Infrequent

Time between order and receipt of shipment

Shorter lead time

Longer lead time

Number of buyers Many Few

Concentration of buyers Dispersed Concentrated

LO2


Logistics

LogisticsThe efficient and cost-

effective forward and

reverse flow and storage of

goods, services, and related

information, into through,

and out of channel member

companies.

LO2


LO3

Exhibit 13.3Exhibit 13.3Marketing Channels for Consumer Marketing Channels for Consumer

ProductsProducts


LO3

Exhibit 13.4Exhibit 13.4Channels for Business Channels for Business and Industrial Productsand Industrial Products


Business-to-Business Exchanges on the Internet

Companies drop the intermediary from the supply chainCompanies drop the intermediary from the supply chain

“Private exchanges” with select suppliers automate the supply chain

“Private exchanges” with select suppliers automate the supply chain

LO3

The Internet has forced traditional distributors to expand their model.


Alternative Channel Arrangements

Multiple channels

Strategic channel alliances

Nontraditional channels

LO3


Channel Strategy Decisions

Factors Factors Affecting Affecting Channel Channel ChoiceChoice

Factors Factors Affecting Affecting Channel Channel ChoiceChoice

Producer FactorsProducer Factors

Product FactorsProduct Factors

Market FactorsMarket Factors

Exclusive DistributionExclusive Distribution

Selective DistributionSelective Distribution

Intensive DistributionIntensive Distribution

Level ofLevel ofDistributionDistribution

IntensityIntensity

Level ofLevel ofDistributionDistribution

IntensityIntensity

LO4


Benefits Hazards

Arm’s Length Relationship

Fulfills a one time or unique need; low involvement/risk

Parties unable to develop relationship; low trust level

Cooperative Relationship

Formal contract without capital investment/long-term commitment; “happy medium”

Some parties may need more relationship definition

Integrated Relationship

Closely bonded relationship; explicitly defined relationships

High capital investment; any failure could affect every channel member

LO5

Types of Channel Relationships


Channel Power, Control, and Leadership

ChannelPower

ChannelPower

A channel member’s capacity to control or influence the behavior of other channel members

A channel member’s capacity to control or influence the behavior of other channel members

ChannelControl

ChannelControl

A situation that occurs when one marketingchannel member intentionally affects another member’s behavior

A situation that occurs when one marketingchannel member intentionally affects another member’s behavior

Channel Leader

Channel Leader

A member of a marketing channel that exercises authority/power over the activities of other members

A member of a marketing channel that exercises authority/power over the activities of other members

LO6


Channel Conflict

ChannelConflict

ChannelConflict

A clash of goals and methods

between distribution channel

members

A clash of goals and methods

between distribution channel

members

LO6

Conflicts may occur if channel members: Have conflicting goals Fail to fulfill expectations of other

channel members Have ideological differences Have different perceptions of reality


Channels and Distribution Decisions for Global Markets

Global Channel Development

Global Channel Development

Channel structure and type differ

Channel structure and type differ

Gray marketing channelsGray marketing channels

Distribute directly or through foreign partners

LO7


Assignment

• CurrentTV Case

• In groups of 5-7, discuss the answers to the questions given in the case.

Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1 Lamb, Hair, McDaniel...

Documents

Transcript of Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1 Lamb, Hair, McDaniel...