Chapter 16

Marketing Channels

15-2

In this chapter…In this chapter…

Marketing channels of distribution and why intermediaries are needed.

Traditional marketing channels, electronic marketing channels, and vertical marketing systems.

Factors that marketing executives consider when selecting and managing a marketing channel.

The variety of terms usedfor marketing intermediaries that vary in specificity and use in consumer and business markets

NATURE AND IMPORTANCE OF MARKETING CHANNELS

THE VALUE CREATED BY INTERMEDIARIES

Marketing Channel

Functions Performed by Intermediaries

• Transactional Function

• Logistical Function

• Facilitating Function

Utilities Received by Consumers

Marketing channel intermediaries perform three functions,each consisting of different activities

CHANNEL STRUCTURE & ORGANIZATIONMARKETING CHANNELS FOR

CONSUMER PRODUCTS AND SERVICES

Direct Channel

Indirect Channel

• Retailers

• WholesalersRetailers

• AgentsWholesalersRetailers

Common marketing channels for consumer products and services by the kind and number of intermediaries

CHANNEL STRUCTURE & ORGANIZATIONMARKETING CHANNELS FOR

BUSINESS PRODUCTS AND SERVICES

Direct Channel

Indirect Channel

• Industrial Distributor

• Agents

• AgentsIndustrial Distributors

Common marketing channels for business products and services by the kind and number of intermediaries

CHANNEL STRUCTURE & ORGANIZATIONELECTRONIC & DIRECT MARKETING CHANNELS;

MULTICHANNEL MARKETING

Electronic Marketing Channels

Direct Marketing Channels

Multichannel Marketing

Consumer electronic marketing channels are similar to those for consumer products and services

CHANNEL STRUCTURE & ORGANIZATIONDUAL DISTRIBUTION &

STRATEGIC CHANNEL ALLIANCES

Dual Distribution

Strategic ChannelAlliances

Honey NutCherrios Ad

Three types of vertical marketing systems: corporate, contractual (most popular), and administered

CHANNEL STRUCTURE & ORGANIZATIONVERICAL MARKETING SYSTEMS

Vertical Marketing Systems

Corporate Systems

• Wholesaler-Sponsored Voluntary Chains

Contractual Systems

• Retailer-Sponsored Cooperatives

• Forward Integration

• Backward Integration

CHANNEL STRUCTURE & ORGANIZATIONVERICAL MARKETING SYSTEMS

Contractual Systems

• Franchising

Manufacturer-Sponsored Retail Franchises

Manufacturer-Sponsored Wholesale Franchises

Service-Sponsored Retail Franchises

Service-Sponsored Franchises

Administered Systems

CHANNEL CHOICE AND MANAGEMENTCHANNEL CHOICE CONSIDERATIONS

Target Market Coverage (Density)

• Intensive Distribution

• Exclusive Distribution

• Selective Distribution

Gucci

CHANNEL CHOICE AND MANAGEMENTCHANNEL CHOICE CONSIDERATIONS

• Information • Convenience

• Variety • Pre- or Post-SaleService

Buyer Requirements

Profitability

CHANNEL CHOICE AND MANAGEMENTCHANNEL RELATIONSHIPS

Sources of Channel Conflict

• Vertical Conflict

• Disintermediation

• Horizontal Conflict

CHANNEL CHOICE AND MANAGEMENTCHANNEL RELATIONSHIPS

Channel Influence

• Economic

• Expertise

• Identification

• Legitimate Right

Channel Captain