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
Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 2
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…
Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 3
Marketing Channel Functions
Specialization and division of labor Specialization and division of labor
Overcoming discrepancies Overcoming discrepancies
Providing contact efficiency Providing contact efficiency
LO1
Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 4
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
Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 5
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
Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 6
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
Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 7
LO1
Exhibit 13.1Exhibit 13.1How Marketing Channels Reduce the How Marketing Channels Reduce the Number of Required TransactionsNumber of Required Transactions
Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 8
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
Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 9
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
Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 10
Factors Suggesting Type of Wholesaling Intermediary to Use
Product characteristicsProduct characteristics
Buyer considerationsBuyer considerations
Market characteristicsMarket characteristics
LO2
Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 11
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
Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 12
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
Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 13
LO3
Exhibit 13.3Exhibit 13.3Marketing Channels for Consumer Marketing Channels for Consumer
ProductsProducts
Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 14
LO3
Exhibit 13.4Exhibit 13.4Channels for Business Channels for Business and Industrial Productsand Industrial Products
Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 15
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.
Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 16
Alternative Channel Arrangements
Multiple channels
Strategic channel alliances
Nontraditional channels
LO3
Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 17
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
Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 18
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
Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 19
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
Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 20
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
Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 21
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
Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 22
Assignment
• CurrentTV Case
• In groups of 5-7, discuss the answers to the questions given in the case.
Top Related