Wholesaling Chapter 15.

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Presentation transcript:

Wholesaling Chapter 15

Marketing Channels Definition Intermediaries Transactional role Logistical role Facilitation role Transactional- Buy, sell, and risk taking Logistical-Gather, store, and distribute products Facilitation- Make good more attractive to buyers

Marketing Channels- B2C Direct v. Indirect

Marketing Channels- B2B

Direct Marketing Channels Dual Distribution L.L. Bean Dual Distribution Hallmark Strategic Channel Alliances Kraft & Starbucks DMC-Customers buy products by interacting with various advertising media without a face-to-face meeting with a salesperson. Dual distribution- Sell through two different types of channels

Channel Intermediaries Merchant Wholesalers Full-service General-merchandise Specialty-merchandise Limited-service Rack jobbers Cash & carry Drop shippers Truck jobbers

Agents & Brokers Characteristics Manufacturer’s Agents Selling Agents Do not take title, make $$ from commissions MA- Carry noncompetitive, complementary merchandise in an exclusive territory SA- Single producer and work with 4 P’s (recommendations for the product) Bring buyers and sellers together. No continuous relationship with them.

Channel Partnerships Vertical Marketing Systems Corporate Contractual Forward integration: Sherwin-Williams Backward integration: Kroger Contractual Wholesaler-sponsored Voluntary Chains Retailer-sponsored Cooperatives Franchising Administered Administered Vertical Marketing Systems VMS- Professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact. Corporate: Under single ownership Contractual- Independent firms integrate their efforts in order to obtain better economies and marketing impact than they would working alone

Channel Partnerships Collaborative use of information and open communication Levi Strauss and Modell’s Sporting Goods

Factors Determining Channels Choice Environmental Factors Consumer Factors Product Factors Company Factors

Considerations Target Market Coverage Buying Requirements Profitability

Considerations Target Market Coverage Intensive distribution Exclusive distribution Selective distribution Intensive- Put it in as many outlets as possible. Coke- “arm’s reach of desire” Exclusive- Only one outlet in a geographical area Radio Shack and Compaq Computers Selective- Only sell in a few retail outlets

Considerations Buyer Requirements Information Convenience Variety Proximity 8-second rule Variety Breadth and depth of products offered by intermediary Attendant Services Variety-PetCo. AS- Whirpool

Considerations Profitability How are margins divided?

Global Market Must consider intermediaries in foreign markets

Types of Conflict Vertical conflict Horizontal conflict Disintermediation Profit margin distribution Attention given to products Horizontal conflict Infringement upon market area Different retailers selling same brand VC- Between different levels of the marketing channel Disintermediation- One party bypasses another for direct marketing

Cooperation Channel Captain Economic influence Expertise influence Identification influence Legitimate influence Channel Captain- Coordinates, directs and supports other channel members ID- Desire to be associated with certain group Legit- Contracts

Legal Issues Dual distribution Exclusive Dealing Tying Arrangements Too much power? Exclusive Dealing Tying Arrangements ED- Channel member restricts another member from selling competitive products TA- Supplier requires buyer to purchase other products in order to get access to products it desires