Role ,Types and Structure of

Channel Intermediaries

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 Content
• Channel Intermediaries and Their Role
• Factors Suggesting Type of Wholesaling
Intermediary to Use
• Channel Functions Performed by
Intermediaries
• Marketing Channels for Consumer Products
• Channels for Business and Industrial Products

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 Channel Intermediaries and Their
Role

Define the types of

channel intermediaries
and describe their
Roles

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 Channel Intermediaries

A channel intermediary that

Retailer
sells mainly to customers.

An institution that buys goods

Merchant from manufacturers, takes title
Wholesaler to goods, stores them,
and resells and ships them.

Wholesaling intermediaries who

Agents and
facilitate the sale of a product by
Brokers representing channel members.

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 Channel Intermediaries

Retailers Take Title to Goods

Merchant
Wholesalers Take Title to Goods

Agents
and Do NOT Take Title to Goods
Brokers

LO2
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 Factors Suggesting Type of
Wholesaling Intermediary to Use

Product characteristics

Buyer considerations

Market characteristics

LO2
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 Factors Suggesting Type of
Wholesaling Intermediary to Use
Factor Merchant Agents/ Brokers
Wholesalers
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 Shorter lead Longer lead
receipt of shipment time time
Number of buyers Many Few
Concentration of buyers Dispersed Concentrated
 Channel Functions
Performed by Intermediaries
Contacting/Promotion
Transactional
Negotiating
Functions
Risk Taking

Physically distributing
Logistical Storing
Functions
Sorting

Facilitating Researching
Functions Financing
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 Logistics

The efficient and cost-

Logistics
effective forward and
reverse flow and storage of
goods, services, and related
information, into through,
and out of channel member
companies.
 Channel Intermediaries and Functions

CHANNEL CHANNEL
INTERMEDIARIES FUNCTIONS

Perform
Retailers Transactional
Wholesalers Logistical
Agents and Brokers Facilitating

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 Channel Structures

Describe the channel

structures for
consumer and
business products
and discuss
alternative channel
arrangements

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 Marketing Channels for
Consumer Products

LO3
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 Channels for Consumer Products

Direct
Channel A distribution channel in
which producers sell
directly to consumers.
© AP Photo/Matt Slocum

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 Channels for Business and
Industrial Products

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 Business-to-Business Exchanges
on the Internet
The Internet has forced traditional
distributors to expand their model.

Companies drop the intermediary

from the supply chain

“Private exchanges” with select

suppliers automate the supply chain

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 Alternative Channel Arrangements

Multiple channels

Nontraditional channels

Strategic channel alliances

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Examples used in Distribution
Channels

07/02/12
Book Publishing Channel Example
 Example: Book Publishing
National
Publisher Printer Wholesaler Retailer Customer
Distributor

2
 Book Publishing
National
Publisher Distributor Retailer Customer
Wholesaler

•Percent of 35% 15% 10% 40%

Retail

$7.00 $3.00 $2.00 $8.00 $20.00

• You get
-35% of retail
- the distributor gets 10%
- the wholesaler gets 15%
- the retailer gets 40%
-less any discount they offer the customer

3
Medical Device Channel
•
•
•

•
•
•
Dental Product Channel Example
 Channels

Direct Sales Big Distributors

Private Practice Institutional Purchasing

Dentist Dentist Department
 Channels

Direct Sales Big Distributors

80% Market Share

30% Margin

Private Practice Institutional Purchasing

Dentist Dentist Department
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