“Economy” (Father Money) “Ecology” (Mother Earth) “Value” (Offspring) M-Channel “Supply-Chain” “Upstream” “Backward Integration” “Derived Demand “Demand-Chain” “Downstream” “Forward Integration” “Primary Demand End Consumer THE MARKETING CHANNEL AS A COMBINED SUPPLY & DEMAND CHAIN

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Place Decisions Are an Important Part of Marketing Strategy

Vertical Marketing Systems Focus on Final Customers © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Fairly good to good Contracts McDonald’s Complete One company ownership Florsheim Some to good Economic power and leadership General Electric Characteristics Type of channel Little or none None Typical “inde- pendents” Amount of cooperation Traditional Vertical marketing systems AdministeredContractualCorporate Control maintained by Examples

Sorting Bulk-Breaking Accumulating Channel Specialists Adjust Discrepancies with Regrouping Activities © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Assorting

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Specialized Storing Facilities May Be Required +

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Channel Systems Can Be Complex

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Trade-Offs of Costs, Service and Sales

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Physical Distribution Concept Focuses on the Whole Distribution System Info on Product Availability Order Processing Time Backorder Procedures Inventory Storage Order Accuracy Damage in Transit Online Status Information Advance Info on Delays Delivery Time Compliance with Customers Defect – Free Deliveries Factors Affecting PD Service Levels Factors Affecting PD Service Levels Handling Adjustments/ Returns

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Goods Are Stored at a Cost

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Specialized Storing Facilities May Be Required +

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Wholesalers Add Value in Different Ways

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Types of Wholesalers

Types of Merchant Wholesalers Service Limited - Function Limited - Function © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin General merchandise Single line (or general- line) Specialty Cash and Carry Drop Shippers Truck Rack- Jobbers Catalog Types of Merchant Wholesalers