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Discuss the Role and function of intermediaries in channel management. Discuss with an industry example.

y Marketing channel: system of marketing institutions that

promotes the physical flow of goods and services, along with ownership title, from producers to consumer or business user; also called a distribution channel. y Direct Selling Direct channel: marketing channel that moves goods directly from a producer to ultimate user Direct selling: strategy designed to establish direct sales contract between producer and final user Eg- DELL (direct seller of computers)

Functions performed by Marketing Intermediaries

Transactional function Buying Purchasing products for resale or as an agent for supply of a product Selling Contacting potential customers, promoting products & soliciting orders Risk taking Assuming business risks in the ownership of inventory that can become obsolete or deteriorate Logistical function Assorting Creating product assortments from several sources to serve customers Storing &Transporting Physically moving a product to customers Facilitating function Financing Extending credit to customers Grading Mktg. Info. & Research Providing info. to customers and suppliers, including competitive conditions and trends

Marketing channels for Industrial Goods

IBM / Airbus Caterpillar Stake Fastener Harkman Electric



Industrial distributor

Industrial distributor

Industrial user

Industrial user

Industrial user

Industrial user

Channel Intermediaries - Wholesalers

Does wholesaler own the products? Yes (merchant wholesalers) How many functions the wholesaler provide? No (agent middlemen) Agent middlemen Auction companies Brokers Manufacturers agents Selling agents

Some functions All functions

Limited-function Merchant Wholesaler Cash-and-carry wholesaler Service Merchant Wholesaler General merchandise wholesaler Single-line or general-line wholesalers Specialty wholesalers Drop-shippers Truck wholesalers Rack Jobbers Catalog wholesalers

Merchant Wholesalers
Service Merchant Wholesaler General merchandise wholesaler Single-line wholesaler Specialty wholesaler Cash-and-carry wholesaler Limitedfunction Merchant Wholesaler Drop shippers Truck wholesalers Rack Jobbers Carry a wide variety of nonperishable items such as hardware, electrical supplies, furniture, drugs, cosmetics and automobile equipments Carry a narrower line than general w/salers, might be only food, apparel, certain types of industrial tools or supplies Carry a very narrow range of products and offer more info. & service than other w/salers, e.g. only health foods Operate like service w/salers except customers must pay cash Take the title but do not handle, stock or deliver, involved in selling, get orders and pass on to producers Specialize in delivering products stocked in their own trucks Specialize in hard-to-handle assortments of products that a retailer doesnt want to manage usually display the products on their own wire racks Sell out of catalogs that may be distributed widely to smaller industrial customers or retailers 6

Catalog Wholesalers

Features of Retailers offering

y Convenience available hours, finding needed products, fast checkout, y y y y y y

location, parking Product selection width and depth of assortment, quality Special services special orders, home delivery, gift wrap, entertainment Fairness in dealings honesty, correcting problems, return privileges, purchase risks Helpful information courteous sales help, displays, demonstrations, product information Social image status, prestige, fitting in with other shoppers Shopping atmosphere comfort, safety, excitement, relaxation, smell, sounds

Major Store Retailer Types

Specialty Stores Department Stores Supermarkets Carry a narrow product line with a deep assortment of products within that line Carries several product lines, invariably all that is required by a typical household Large, low-cost, low-margin, high volume, self-service operation designed to serve the customers need for food, laundry and household maintenance products Relatively small stores located near residential areas, carry limited line of high-turnover convenience products Sell standard merchandise at lower prices, by accepting lower margins, but pushing for higher sales volume Sell merchandise bought at less-than-regular wholesale prices and sold at less than retail Very large stores traditionally aimed at meeting consumers total needs for routinely purchased food and nonfood items

Style & Chirag Din in Mumbai Pantaloon, Westside, etc. Foodland & Garwares in Mumbai Street corner grocery store Big Bazar Bata Wal-Mart

Convenience Stores Discount Stores Off-Price Retailer Superstores

Summary of the alternative Channels of Distribution available to a Manufacturer

Door-to-door sales Department stores Convenience Freecourt retailing Chemists Discounters

Direct delivery to customers

Retailing related Institutional

Monetary services Theme parks Universities Hospitals Educational


Interactive Kiosks CD ROMs TV channels Virtual stores Online services 9 Internet

New Channels Direct Mktg.

Railway station Underground Airports Sports centers

Loyalty schemes Sales promotion