1. 14-1 Channels of Distribution Chapter 14

2. 14-2 Chapter Goals Nature and importance of middlemen and distribution channels Direct sales to retailers Decisions in designing a channel Major channels for goods and services Vertical marketing systems Choosing specific channels and middlemen Intensity of distribution Conflict and control within channels Legal considerations in channels

3. 14-3 Middlemen Middlemen A business firm that renders services directly related to the sale/purchase of a product as it flows through from producer to consumer A business firm that renders services directly related to the sale/purchase of a product as it flows through from producer to consumer You can eliminate middlemen, but not the essential distribution activities they perform You can eliminate middlemen, but not the essential distribution activities they perform

4. 14-4 Distribution Channels DISTRIBUTION CHANNELS People and firms involved in the transfer of title to a product as the product moves from producer to ultimate consumer or business user DISTRIBUTION CHANNELS People and firms involved in the transfer of title to a product as the product moves from producer to ultimate consumer or business user ProducersMiddlemen Final Consumer Or Business User

5. 14-5 Middleman Activities

6. 14-6 Middleman Activities

7. 14-7 Major Channels of Distribution

8. 14-8 Vertical Marketing Systems

9. 14-9 Choice of Channels: Market Type of Market Geographic concentration Number of potential customers Order size

10. 14-10 Choice of Channels: Product Unit Value Technical Nature Perishability

11. 14-11 Choice of Channels: Middleman Services provided by middlemen Services provided by middlemen Availability of desired middlemen Availability of desired middlemen Producer’s and middlemen’s policies Producer’s and middlemen’s policies

12. 14-12 Choice of Channels: Company Desire for channel control Services provided by seller Ability of management Financial resources

13. 14-13 Intensity of Distribution

14. 14-14 Conflict in Channels Horizontal Middlemen of the same type Middlemen of the same type Different types of middlemen on the same level Different types of middlemen on the same level Retailer

15. 14-15 Conflict in Channels Vertical Producer vs. Wholesaler Producer vs. Retailers

16. 14-16 Who Controls the Channels? Expertise Sanctions Rewards

17. 14-17 Channel as Partnership CooperationCollaboration Relationship Marketing Coordination

18. 14-18 Legal Considerations Exclusive dealing Tying contracts Refusal to deal Exclusive territory

19. 14-19 Key Terms and Concepts  Middlemen  Merchant middlemen  Agent middlemen  Disintermediation  Distribution channel  Gray marketing  Direct distribution  Indirect distribution  Multiple distribution channels  Vertical marketing system  Corporate vertical marketing system  Contractual vertical marketing system  Administered vertical marketing system  Intensity of distribution  Intensive distribution  Selective distribution  Exclusive distribution  Channel conflict  Chargeback  Horizontal conflict  Scrambled merchandising

20. 14-20 Key Terms and Concepts  Vertical conflict  Slotting fee  Channel control  Channel power  Exclusive dealing  Tying contract  Refusal to deal  Exclusive-territory policy