Managing Marketing Channels Instructor: Safaa S. Y. Dalloul Principles of Marketing Unit 9

IF YES DETERMINE IT? By answer the following questions:

1. What are the elements of this channel? a. Is all element an important? b. Can we eliminate one or two elements? Thinking

2. Why we need channel? What are the benefits of it?

3. Describe the process of the channel?

We can select any intermediary regardless who is it “Agree or Disagree”

Elements of Lecture Defining Marketing ChannelPlace Element of the Marketing MixMarketing ChannelMarketing IntermediariesChannel Structure DecisionsVertical Marketing SystemsChannel Chose and Management

Defining Market Channel It consists of individual and firm involved in the “process” of marketing product or serves available for use or consumption by consumer or industrial user.

There are a relationship between marketing channel and place

Place Element of the Marketing Mix Place is concerned with making products available in the right quantities and locations when customers want them.

What is the intermediary?

It is person or electronic means who are connecting between producer and end user

There are different intermediaries?

Marketing Intermediaries  Middleman is any intermediary between manufacturer and end user market.  Agent or broker is any intermediary with legal authority to act on behalf of the manufacturer.  Retailer is an intermediary who sells to consumer.

Marketing Intermediaries  Wholesaler is an intermediary who sells to other intermediaries, usually to retiles.  Distributor is an inaccurate term usually used to describe intermediaries who perform a variety of distribution functions, include selling, maintaining inventories.

What are the benefits of intermediary

Value created by intermediaries:  Improve exchange efficiency  Perform marketing functions  Quantity discrepancies

Marketing Channel Function  Marketing channel function performed by intermediaries:  Transactional function  Logistical function  Facilitating function

Types of Channels

Types of Channels

Dual Distribution  It occurs when an organization distributes its product through two or more different types of marketing channels which typically compete for the same target market.  It may cause conflict with channel intermediaries

Vertical Marketing Systems  They are professionally managed and centrally coordinate. Marketing channel is designed to achieve channel economic and maximum marketing impact a marketing channel that a single channel member coordinates.

Types of vertical marketing systems  A corporate system is the combination of successive stage of production and distribution under single ownership.

Types of vertical marketing systems  Contractual: under a contractual vertical marketing system, independent production and distribution firms integrate their effort on contractual basis to obtain greater functional economic and marketing impact than they could achieve alone.

Types of vertical marketing systems  Administered in comparison: administered vertical marketing system achieve coordination at successive stage of production and distribution by the size and influence of one channel member rather than through ownership.

Factors Affect Channel Chose and Management Channel Chose and Management Factors Culture Environment Product Company

Factors to Consider When Selecting Specific Intermediaries Channel Chose and Management Reach their target market. Have a good reputation. Handle distribution functions efficiently. Order large quantities. Pay invoices quickly.

Factors to Consider When Selecting Specific Intermediaries Channel Chose and Management Display and promote merchandise well. Have a good location and professional salespeople.