Kotler pom 15e_inppt_07

Chapter TwelveMarketing Channels:

Delivering Customer Value

Copyright ©2014 by Pearson Education, Inc. All rights reserved

Supply Chains and the Value Delivery Network

Upstream partners include raw material suppliers, components, parts, information, finances, and expertise to create a product or service

Downstream partners include the marketing channels or distribution channels that look toward the customer

Supply Chain Partners



Supply chain “make and sell” view includes the firm’s raw materials, productive inputs, and factory capacity

Supply Chain Views



Value delivery network is the firm’s suppliers, distributors, and ultimately customers who partner with each other to improve the performance of the entire system

Value Delivery Network


The Nature and Importance of Marketing Channels

How Channel Members Add ValueInformatio

nPromotio

n Contact

Matching Negotiation

Physical distribution

Financing Risk taking


The Nature and Importance of Marketing Channels

Number of Channel Levels


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Channel Behavior and Organization

Marketing channel consists of firms that have partnered for their common good with each member playing a specialized role.

Channel conflict refers to disagreement over goals, roles, and rewards by channel members

• Horizontal conflict• Vertical conflict

Channel Behavior


Channel Behavior and Organization

Multichannel Distribution System


Channel Design Decisions

Analyzing consumer

needs

Setting channel

objectives

Identifying major

channel alternatives

Evaluation



Finding out what target consumers want from the channel

What segments to serve

Best channels to use

Minimizing the cost of meeting customer service requirements

Analyzing Consumer Needs



• Targeted levels of customer service• Balance consumer needs not only against the

feasibility and costs of meeting these needs but also against customer price preferences

Setting Channel Objectives



• Types of intermediaries• Number of marketing intermediaries• Responsibilities of channel members

Identifying Major Alternatives


Channel Design DecisionsIdentifying Major Alternatives

Intensive distribution

• Candy and toothpaste

Exclusive distribution

• Luxury automobiles and prestige clothing

Selective distribution

• Television and home appliance



Each alternative should be evaluated against:– Economic criteria– Control– Adaptive criteria

Evaluating the Major Alternatives



• Channel systems can vary from country to country

• Must be able to adapt channel strategies to the existing structures within each country

Designing International Distribution Channels


Channel Management Decisions

Selecting channel

members

Managing channel

members

Motivating channel

members

Evaluating channel

members


12 - 17Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Retailing & Wholesaling

RetailingRetailing includes all the

activities in selling products or services directly to final consumers for their personal, non-business use

Retailers are businesses whose sales come primarily from retailing


RetailingRetailer Marketing Decisions


Types of Retailers

Amount of Service Product Line Relative

PricesOrganizational

Approach

Can be classified in terms of :

Retailing

• Amount of service• Self-service• Limited service• Full service

Types of Retailers


RetailingProduct Line

Specialty stores

• Narrow product line with deep assortment

Department stores

• Wide variety of product lines

Convenience stores

• Limited line of high-turnover goods

Superstores• Non-food goods

Category killers• Deep in category with sales staff


RetailingTypes of Retailers

Relative Prices

Discount stores

Off-price retailers

Factory outlets

Warehouse clubs


http://www.premiumoutlets.com/outlets/outlet.asp?id=10

RetailingTypes of Retailers

Organizational Approach

Corporate chains

Voluntary chains

Retailer cooperatives

Franchise organizations


Retailing

Corporate Chains are two or more outlets that are commonly owned and controlled

• Size allows them to buy in large quantities at lower prices and gain promotional economies– Sears– CVS

Types of RetailersOrganizational Approach


Retailing

Voluntary chains are wholesale-sponsored groups of independent retailers that engage in group buying and common merchandising

• IGA• Western Auto



Retailing

Retailer cooperatives is a group of independent retailers that band together to set up a joint-owned, central wholesale operation and conduct joint merchandising and promotion effort

• Ace Hardware• Associated Grocers



Retailing

Franchise organizations are based on some unique product or service; on a method of doing business; or on the trade name, good will, or patent that the franchisor has developed

Types of Retailers Organizational Approach


Wholesaling

Selling and promoting

Buying assortment building

Bulk breaking

Warehousing

Transportation

Financing

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


WholesalingTypes of Wholesalers

Merchant wholesalers

Agents and brokers

Manufacturers’ sales branches

and offices


Wholesaling

Merchant wholesalers is the largest group of wholesalers and include:

• Full-service wholesalers who provide a full set of services

• Limited service wholesalers who provide few services and specialized functions

Types of Wholesalers


Wholesaling

Brokers and agents do not take title, perform a few functions, and specialize by product line or customer type

• Brokers bring buyers and sellers together and assist in negotiations

• Agents represent buyers or sellers



Wholesaling

Manufacturers’ sales branches and offices is a form of wholesaling by sellers or buyers themselves rather than through independent wholesalers



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