Ch. 10 Marketing Channels
-They have contacts, experience, specialization, and scale of operation
-They match supply from producers to demand from customers
Example: Orbit Irrigation
-This company manufactures irrigation products.
-They are very small and only located in Salt Lake City, yet they sell products all over the US through intermediaries (distribution channels)
-More than 50% of their value is sold through Home-Depot
2. How do I get the channel partners to do what I want them to do? i.e. how would P&G get Walmart to do what they want? (channel management)
2. Promotional Effort- effective point-of-purchase promotion and effective personal selling support
3. Customer Service- installation, training, repair
4. Market Information- information about customers and their buying habits/trends
2. Producer -> Retailer > consumer (Levi Selling to JC Pennies then to us)
3. Producer > wholesaler > Retailer > Consumer (Budweiser sells to Eagle Distribution to Kroger to consumers)
Moving towards E-retailers.
-started replenishment service: auto replenish your goods/services based on a schedule
This was picked up by Amazon as well.
-Two or more companies at one channel level join together to follow a new marketing example
-Example: a bank inside a supermarket, or a pizza hut in a gas station
-A single firm sets up two or more marketing channels to reach one or more customer segments
-Example: Company X sells their products to retailers, distributors, and consumers all at once
1. Corporate VMS- Common ownership at different levels of the channel
Example: Apple having retail stores to sell their own products.
2. Contractual VMS- contractual agreements among channel members
Example: McDonald’s and franchising. McDonald’s does not sell us McNugget, the franchise owners do.
-For new products, offer higher margins and introductory discounts.
-For old products, encourage adequate levels of inventories through volume discounts and buyback allowances.
-Encourage promotional activity with personal selling, corp. advertising, free point-of-sale promotions
-encourage high levels of customer service
Incentives to provide promotional activity
POS (point of sale)= displays on a cash register example
Vertical conflict- different levels; ex. wholesaler to retailer