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McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All Rights Reserved.

FIGURE 15-1 FIGURE 15-1 The variety of terms used for marketing intermediaries that vary in specificity and use in consumer and business markets 15-2

NATURE AND IMPORTANCE OF MARKETING CHANNELS THE VALUE CREATED BY INTERMEDIARIES LO1  Marketing Channel Marketing Channel  Functions Performed by Intermediaries Transactional Function Logistical Function Facilitating Function  Utilities Received by Consumers 15-3

FIGURE 15-2 FIGURE 15-2 Intermediaries minimize transactions and the cost of distribution for producers and customers 15-4

FIGURE 15-3 FIGURE 15-3 Marketing channel intermediaries perform three functions, each consisting of different activities 15-5

CHANNEL STRUCTURE & ORGANIZATION MARKETING CHANNELS FOR CONSUMER GOODS AND SERVICES LO2  Direct Channel  Indirect Channel Retailers Wholesalers  Retailers Agents  Wholesalers  Retailers 15-6

FIGURE 15-4 FIGURE 15-4 Common marketing channels for consumer offerings by the kind and number of intermediaries 15-7

CHANNEL STRUCTURE & ORGANIZATION MARKETING CHANNELS FOR BUSINESS GOODS AND SERVICES LO2  Direct Channel  Indirect Channel Industrial Distributor Agents Agents  Industrial Distributors 15-8

FIGURE 15-5 FIGURE 15-5 Common marketing channels for business offerings by the kind and number of intermediaries 15-9

CHANNEL STRUCTURE & ORGANIZATION ELECTRONIC & DIRECT MARKETING CHANNELS; MULTICHANNEL MARKETING LO2  Electronic Marketing Channels Electronic Marketing Channels  Direct Marketing Channels Direct Marketing Channels  Multichannel Marketing Multichannel Marketing 15-10

FIGURE 15-6 FIGURE 15-6 Consumer electronic marketing channels are similar to those for consumer and business offerings 15-11

CHANNEL STRUCTURE & ORGANIZATION DUAL DISTRIBUTION & STRATEGIC CHANNEL ALLIANCES LO2  Dual Distribution Dual Distribution  Strategic Channel Alliances Strategic Channel Alliances 15-12

FIGURE 15-7 FIGURE 15-7 Functions performed by independent wholesaler types 15-13

CHANNEL STRUCTURE & ORGANIZATION CHANNEL INTERMEDIARIES LO2  Merchant Wholesalers Merchant Wholesalers Full-Service Wholesalers  General Merchandise (Full-Line) Wholesalers  Specialty Merchandise (Limited-Line) Wholesalers 15-14

CHANNEL STRUCTURE & ORGANIZATION CHANNEL INTERMEDIARIES LO2  Merchant Wholesalers Merchant Wholesalers Limited-Service Wholesalers  Rack Jobbers  Cash and Carry Wholesalers  Drop Shippers/Desk Jobbers  Truck Jobbers 15-15

CHANNEL STRUCTURE & ORGANIZATION CHANNEL INTERMEDIARIES LO2  Agents and Brokers Manufacturer’s Agents Selling Agents Brokers  Manufacturers Branch Offices Sales Offices 15-16

FIGURE 15-8 FIGURE 15-8 Three types of vertical marketing systems: corporate, contractual (most popular), and administered 15-17

CHANNEL STRUCTURE & ORGANIZATION VERICAL MARKETING SYSTEMS LO2  Administered Systems  Channel Partnership Channel Partnership 15-18

CHANNEL CHOICE AND MANAGEMENT FACTORS AFFECTING CHANNEL CHOICE LO3  Environmental Factors  Consumer Factors  Product Factors  Company Factors 15-19

CHANNEL CHOICE AND MANAGEMENT CHANNEL CHOICE CONSIDERATIONS LO3  Target Market Coverage Intensive Distribution Exclusive Distribution Selective Distribution 15-20

CHANNEL CHOICE AND MANAGEMENT CHANNEL CHOICE CONSIDERATIONS LO3  Satisfying Buyer Requirements Information Convenience Variety Pre- or Post-Sale Service 15-21

CHANNEL CHOICE AND MANAGEMENT CHANNEL CHOICE CONSIDERATIONS LO3  Profitability Margins Earned Channel Costs 15-22

CHANNEL CHOICE AND MANAGEMENT CHANNEL RELATIONSHIPS LO4  Sources of Channel Conflict Sources of Channel Conflict Vertical Conflict Horizontal Conflict 15-23

CHANNEL CHOICE AND MANAGEMENT CHANNEL RELATIONSHIPS LO4  Channel Captain Channel Captain  Channel Influence Economic Expertise Identification Legitimate Right 15-24

CHANNEL CHOICE AND MANAGEMENT CHANNEL RELATIONSHIPS LO4  Legal Considerations Dual Distribution Vertical Integration Exclusive Dealing Tying Arrangements Refusal to Deal Resale Restrictions 15-25

FIGURE 15-9 FIGURE 15-9 The Clayton Act and Sherman Act place legal restrictions on specific marketing channel strategies and practices 15-26