copyright © 2007 pearson education canada 11-1 chapter eleven marketing channels and supply chain...

Copyright © 2007 Pearson Education Canada11-1

Chapter ElevenMarketing Channels and

Supply Chain Management

with Duane Weaver


Marketing or Distribution Channel

A set of interdependent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user.


Why Use Channel Members• The use of intermediaries results from

their greater efficiency in making goods available to target markets.

• Offers the firm more than it can achieve on its own through the intermediaries:– Contacts.– Experience.– Specialization.– Scale of operation.


Channel Functions• Information.

• Promotion.

• Contact.

• Matching.

• Negotiation.

• Physical distribution.

• Financing.• Risk taking.


Wholesalers/Retailers• Wholesalers.

– Merchant wholesalers.– Agents and brokers.– Manufacturer’s sales branches & offices.

• Retailers.– Amount of service .– Product line.– Relative prices.– Retail organization.


Wholesaler Marketing Decisions

• Wholesaler strategy.– Target market.– Service positioning.

• Wholesaler marketing mix.– Product and service assortment.– Prices.– Promotion.– Place (location).


What is Retailing?

Retailing includes all the activities involved in selling products or services directly to final consumers for their personal, non-business use.


Retailing Functions

• Information function – to customers and manufacturers.

• Product function – help define products.

• Price function – promotions, negotiation.• Place function – convenience to consumers.

• Promotion function – run their own promos.

• Ownership function – take title and absorb the risk.


Classifying Retail by Amount of Service

• Self-service retailers:– Serve customers who are willing to perform their

own “locate-compare-select” process to save money.

• Limited-service retailers:– Provide more sales assistance because they carry

more shopping goods about which customers need information.

• Full-service retailers:– Usually carry more specialty goods for which

customers like to be “waited on.”


Product Line Retailers

• Specialty stores.– Narrow product line, deep assortment.

• Department stores.– Wide variety of product lines.

• Supermarkets.– Wide variety of food, laundry, household

products.• Convenience stores.

– Limited line of high-turnover goods.


• Superstores.– Large assortment of food and non-food

items.

• Category killer.– Big box specialty store.

• Service retailers.– Provide services rather than tangible

goods.

Product Line Retailers (cont’d)


• Discount stores.– Sells standard merchandise at lower prices by

accepting lower margins and selling at higher volume.

• Off-price retailers.– Buys at below wholesale, sells at less than retail.– Independents.– Factory outlets.– Warehouse clubs.

Relative Price Retailers


Channel Behaviour• The channel is most effective when:

– Each member is assigned tasks it can do best.– All members cooperate to attain channel goals.

• If this does not happen, conflict occurs:– Horizontal conflict occurs among firms at the same

level of the channel (e.g. retailer to retailer).– Vertical conflict occurs between different levels of

the same channel (e.g. wholesaler to retailer).

• Some conflict can be healthy competition.


Channel Conflict• Disagreement between members over

goals and roles.• Horizontal conflict.

– Conflict between firms on the same level.• Vertical conflict.

– Conflict between firms on different levels.• Disintermediation.

– Displacement of a traditional member from the marketing channel.

– Selling direct via the Internet.


Types of Channels• Conventional channel.

– Channel members independently owned.

• Vertical channel.– Channel members act as a unified system.

• Horizontal channel.– Two or more companies on the same level

join together for mutual gain.

• Hybrid channel.– Combination to serve different segments.


International Distribution• Exporting.

– Direct.– Indirect.

• Joint ventures.– Licensing.– Contract manufacturing.– Management contracting.– Joint ownership.

• Direct investment.


Channel Design/Management• Selection.

– Fit with channel objectives.

• Motivation.– Maintain strong partnerships.– Reward good performance. – Assist or replace weaker ones.

• Evaluation.– Compare performance against standards

and objectives.


Major Logistics Functions

• Order processing.

• Warehousing.

• Inventory management.

• Transportation.

• Integrated supply chain management.– Cross-functional teamwork in company.– Building channel partnerships.


Thanks!

copyright © 2007 pearson education canada 11-1 chapter eleven marketing channels and supply chain...

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