CHAPTER 14: Marketing Channels and Supply Chain Management

TYPES OF DISTRIBUTION CHANNELS A. Direct Selling - direct sales between buyer & seller Ex. Mary Kay, Tupperware, Baskets B. Marketing Intermediaries: Figure 14.1

DUAL DISTRIBUTION Use of 2 or more distribution channels to reach the same target market.

REVERSE CHANNELS Backward movement of goods from user to the producer Ex. recycling

Functions of Intermediaries Create: TIME UTILITY PLACE UTILITY OWNERSHIP UTILITY

Types of Wholesaling Intermediaries 1. Manufacturer-Owned Facilities - sales branches & offices 2. Independent Wholesaling Intermediaries - account for majority of wholesaling establishments & wholesale sales in U.S. Merchant wholesalers: take title to goods they handle Agents & Brokers: may or may not take possession of goods but they never take title

3. Retailer-Owned Facilities - independent retailers may band together to form buying groups to get cost savings thru quantity purchases

Factors Affecting Channel Strategy Decisions 1. MARKET FACTORS whether product is intended for the consumer (long) or the business (short) market 2. PRODUCT FACTORS perishable or complex products(short channels) generally the more standardized the product, the longer the channel

3. PRODUCER FACTORS 4. COMPETITIVE FACTORS companies w/ adequate financial, managerial & marketing resources are less compelled to utilize intermediaries in marketing their products 4. COMPETITIVE FACTORS inadequate promotion of products may require manufacturers to develop unique distribution channels

Distribution Intensity 1. INTENSIVE DISTRIBUTION - used for convenience goods Ex. Gum, soda, candy, cigarettes 2. SELECTIVE DISTRIBUTION - a firm chooses only a limited number of retailers in a market area to handle its product line Ex. Nike

3. EXCLUSIVE DISTRIBUTION - extreme form of selective distribution - most often used for specialty goods Suboptimization

Modes of Transportation Truck Internet Railroad Pipeline Air Water Carriers