Managing

Marketing Channels
2
Explain why companies use marketing
channels and discuss the functions these
channels perform
Discuss how channel members interact and
how they organise the work of the channel
Identify the major channel alternatives open to
a company and how companies select, motivate,
and evaluate channel members
3
Explain the roles of retailers and wholesalers in the
distribution channel
Discuss the importance of marketing logistics and
integrated supply chain management

4
A value delivery network is a network made
up of the company, suppliers, distributors and
customers who partner with each other to
improve the performance of the entire system.
5
A marketing channel (also known as a
distribution channel) is a set of interdependent
organisations involved in the process of
making a product or service available for use
or consumption by the consumer or business
user.
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Information
Promotion
Contact
Matching
Negotiation
Distribution
Financing
Risk taking
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A channel conflict is a disagreement among
marketing channel members on goals and
roles.
Horizontal conflict is conflict at the same
channel level. Vertical conflict is conflict
between different levels.
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Manufacturer
Wholesaler
Retailer
Consumer Manufacturer





Retailer
Manufacturer
W
h
o
l
e
s
a
l
e
r

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A franchise organisation is the most common
type of contractual relationship, which exists
between a manufacturer, wholesaler or service
organisation and independent businesspeople
(franchisees) who buy the right to own and
operate one or more units in the franchise
system.
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Manufacturer-sponsored
retailer franchise system
Manufacturer-sponsored
wholesaler franchise system
Service-firm-sponsored
retailer franchise system
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Buying into a proven system
Limited capital required
Benefit of centralised purchasing power
Instant expertise available
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Lack of control
Inconsistencies in service levels and operating standards
Fees required plus royalties and payment for management
services
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Disintermediation is the elimination of a layer
of intermediaries from a marketing channel or
the displacement of traditional resellers by
radically new types of intermediaries.
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Analysing customer needs
Setting channel objectives
Identifying channel alternatives
Evaluating channel alternatives
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Company sales force
Manufacturers agency
Intermediaries
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Selling and promoting
Buying and assortment
building
Bulk-breaking
Warehousing
Transportation
Financing
Risk bearing
Market information
Management services and
advice
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Merchant wholesalers
Full-service wholesalers
Wholesale merchants
Industrial distributors
Manufacturers and
retailers branches and
offices


Agents
Manufacturers
agents
Selling agents
Purchasing agents
Commission merchants
Brokers

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Limited-service wholesalers
Cash-and-carry
Truck
Drop shippers
Rack jobbers
Producers cooperatives
Mail-order

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Retailing includes all the activities involved in
selling goods and services directly to final
consumers for their personal, non-business
use.
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Amount of service
Breadth and depth of
product lines
Relative prices Organisation
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Self-service retailers cater for
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 consumers need information
Full-service retailers carry more specialty
goods for which customers like to be waited on
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Specialty store
Department store
Supermarkets
Convenience stores
Superstores
Hypermarkets
Discount stores
Off-price retailer
Factory outlet
Warehouse club

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Corporate chains
Voluntary chains
Retailer cooperatives
Franchise organisations
Merchandising conglomerates
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Intensive distribution means stocking the product
in all possible outlets
Exclusive distribution is giving a limited number of
dealers the exclusive right to distribute the companys
products in their territories
Selective distribution is the use of more than one, but
less than all intermediaries willing to carry the product
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Selecting channel members
Managing and motivating channel members
Evaluating channel members
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Market logistics includes all the tasks involved
in planning, implementing and controlling the
physical flow of goods, services and related
information from points of origin to points of
consumption or use to meet customer
requirements at a profit.
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Suppliers Company Resellers Customers
Inbound
logistics
Outbound
logistics
Reverse
logistics
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Warehousing
Inventory management
Transportation
Logistics information management
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Road
Rail
Water
Pipeline
Air
Internet
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Integrated logistics management is the logistics
concept that emphasizes teamwork, both
inside the company and among all the
marketing channel organisations to maximise
the performance of the entire distribution
system.
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New retail forms and short life cycles
Growth of non-store retailing
Retail convergence
Rise of mega-retailers
Growing importance of retail technology
Global expansion of retailers
Blurring of lines between retailers and wholesalers
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What do you understand to be a firms supply
chain and how is it different from its value
delivery network?
Why do firms employ multi-channel distribution systems?
What are the main challenges facing retailers and
wholesalers who wish to remain a viable part of the
marketing channel?
38
Identify the primary challenges an organisation faces in
managing its channel members. What are some of the
methods companies use to motivate channel partners?
What factors might govern international expansion for
European retailers? Why might local retailers be well
positioned for global expansion? How will online retailing
affect global retail expansion?