Marketing Marketing Channel

Value delivery network
Firm’s suppliers, distributors, and ultimately customers who partner with each other to improve performance of whole system
Marketing channels
Sets of independent organizations that help make product or service available for use or consumption by consumer/ business user
Greater efficiency in making goods available in target markets. Intermediaries usually offer firm more than it can achieve on its own
Transform assortment of products into assortments wanted by consumers
Channel members add value bridging major time, place and possession gaps separating goods and services from users
Channel levels
Layers of intermediaries performing some work in bringing the product and ownership closer to final buyer
Direct marketing channel
Marketing channel with no intermediary levels
Indirect marketing channels
One or more intermediary levels
Marketing channel
Firms that have partnered for their common good with each member playing specialized role
Channel conflict
Disagreement over goals, roles, and rewards by channel members
Horizontal Conflict
Occurs among firms at same level of channel
Vertical Conflict
Occurs between different levels of the same channel
Conventional distribution systems
One or more independent producers, wholesalers, and retailers. Each business seeks to maximize its own profits at the expense of profits for system as a whole; little control over other members and no way for roles and resolving conflict
Vertical Marketing Systems
Provide channel leadership and consist of producers, wholesalers, and retailers acting as a unified system
One member owns the other member, has contracts with them, or has power where they must all cooperate
Corporate vertical marketing system
Integrate successive stages of production and distribution under single ownership
Contractual vertical marketing system
Independent firms at different levels of production and distribution who join together through contracts to obtain more economies or sales impact than each could achieve alone
Franchise organizations
Contractual vertical marketing systems where channel members (franchisor) links several stages in production-distribution process
Administered vertical marketing systems
Few dominant channel members without common ownership. Leadership comes from size and power
Horizontal marketing systems
Two or more companies at one level join together to follow new marketing opportunity, Company combines financial, production or marketing resources to accomplish more than just one company
Multichannel distribution system
Single firm sets up two or more marketing channels to reach one or more customer segments
When product or service producers cut out intermediaries and go directly to final buyers or when radically new types of channel intermediaries displace traditional ones
Analyze consumer needs
Do consumers want to buy nearby or willing to travel to centralized locations?
Would they rather buy in person, phone, or online?
Do they value assortment or specialization?
Do they want many add-on services or obtain from elsewhere?
Setting Channel Objectives
Targeted levels of customer service
Segments to serve
Channels to use
Minimize cost of meeting customer service rqm’ts
Identify Major Alternatives
Identify channel members to carry out channel work
Producer and intermediaries need to agree on terms and responsibilities of everyone
Intensive Distribution
Stock product in as many outlets as possible
Exclusive Distribution
Give limited number of dealers exclusive rights to distribute company’s product in territories
Selective Distribution
Using more than one but fewer than all intermediaries willing to carry company’s products
Economic Criteria
Compare likely sales, costs, and profitability of channel alternatives
Control Issues
When you give intermediaries control over marketing of product
Adaptive Criteria
Balancing long-term commitments with keeping channel flexible so it adapts to environmental changes
Select channel members
Years in Business
Other lines carried
Growth and profit record
Partner Relationship Management software
Used to help recruit, train, organize, manage, motivate, and evaluate relationships with channel partners and form long-term partnerships
Supply Chain Management
Process of managing upstream and downstream value-added flow of material, final goods, and related info among suppliers, company, resellers and final consumers
Exclusive Dealing
When seller requires sellers not handle competitor’s products
Exclusive territorial agreements
Where producer or seller limits territory
Tying agreements
Agreements where dealer must take most or all of product line
Dealer’s rights
Producers are free to select dealers. but right to terminate is restricted without cause
Marketing Logistics
Planning, Implementing, and controlling physical flow of goods, services, and related info
Distribution Center
Large, highly automated warehouse designed to receive goods from various plants and suppliers, take orders, fill them efficiently, and deliver goods to customers ASAP
Inventory Management
Just-in-time system
Smart Shelves
Pricing of products, delivery performance, and condition of good when it arrives
Logistic Information Management
Management of flow of information like customers orders, billing, inventory levels and customer data
Electronic Data Interchange
Vendor-Managed Inventory
Integrated Logistics Management
Recognition of providing customer service and trimming distribution costs using internal and external teamwork
Third-party logistics
Outsourcing logistics functions to 3PLs

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