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C h a n n e l s C h a n n e l s
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CHANNELS FROM INSTITUTIONS TO RELATIONSHIPS
by Dr. Ted Mitchell
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HOW DO GOODS GET FROM PRODUCERS TO MANUFACTURERS TO USERS?
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DIFFERENT PERSPECTIVES
INSTITUTIONAL FUNCTIONAL SYSTEM FLOW RELATIONSHIP
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DIFFERENT PERSPECTIVES
INSTITUTIONAL THE CLASSIC APPROACH TO UNDERSTANDING CHANNELS FUNCTIONAL SYSTEM FLOW RELATIONSHIP
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From An Institutional Perspective There Are Six Types of Public Warehouses
Special Commodity Warehouses Field Warehousing Cold Storage Household Storage General Warehouse Bonded Warehouse
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WHY DO MIDDLEMEN COME INTO THE SYSTEM?
The Institutional Perspective Does Not Explain...
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WHY DO MIDDLEMEN COME INTO THE SYSTEM?
The Institutional Perspective Does Not Explain WHY DO MIDDLEMEN COME INTO THE SYSTEM?
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WHY DO MIDDLEMEN COME INTO THE SYSTEM
WHY DO MIDDLEMEN COME INTO THE SYSTEM? MIDDLEMEN ARISE BECAUSE THEY ADD ECONOMIC VALUE TO THE ECONOMIC DELIVERY SYSTEM The Institutional Perspective Does Not Explain
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M M M M M M M M 8 PRODUCERS CONSUMERS 8 C C C C C C C C
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M M M M M M M M 8 PRODUCERS CONSUMERS 8 C C C C C C C C
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64 TRANSACTIONS M M M M M M M M 8 8 PRODUCERS CONSUMERS C C C C C C C
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16 TRANSACTIONS M M M M M M M M MIDDLEMAN 8 8 PRODUCERS CONSUMERS C C
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CHANGES IN PERSPECTIVE
INSTITUTIONAL FUNCTIONAL ORGANIZE INSTITUTIONS BY THE FUNCTIONS THEY PERFORM SYSTEM FLOW RELATIONSHIP
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GENERAL FUNCTIONS OF MIDDLEMEN
PROVIDE CONTACT EFFICIENCY AND REDUCE TRANSACTION COSTS ACCUMULATING, GRADING, STORING, BREAKING BULK, CREATING ASSORTMENTS SEARCHING AND INFORMATION SERVICES
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MIDDLEMAN IN THE MARKETING CHANNEL CONTINUE TO EXIST BECAUSE THEY PERFORM FUNCTIONS THAT ADD VALUE TO THE EXCHANGE SYSTEM
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FUNCTIONS PROVIDED Carrying Physical Inventory Freight Consolidation Planning Creating Assortments Assembling Packaging Packing
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FUNCTIONS CONTINUED Storing Goods in Transit
Controlling Goods in Transit credit financing revenue taxes and duties Yard Storage Handling and Storing Containers Order Filling Dry Bulk Commodity handling, storage, bagging ETC.....
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MIDDLEMEN CAN BE ELIMINATED FROM A MARKETING CHANNEL
THE FUNCTIONS CAN NOT BE ELIMINATED AND MUST BE PERFORMED BY SOMEBODY
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DIFFERENT PERSPECTIVES
INSTITUTIONAL FUNCTIONAL SYSTEM FLOW ORGANIZING AND INTEGRATING FUNCTIONS PLAYERS AND ROLES
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INFORMATION TITLE PHYSICAL MONEY PROMOTION RETURNS
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WHAT FLOWS AM I IN? WHAT FLOWS SHOULD I BE IN?
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CHANNEL FLOWS AND VERTICAL MARKETING SYSTEMS
PHYSICAL PRODUCT FLOWS TITLE/OWNERSHIP FLOWS PAYMENT FLOWS PROMOTION FLOWS INFORMATION FLOWS NEGOTIATION ORDERING CREDIT/RISK TAKING FINANCIAL FLOWS
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LENGTH OF TRADITIONAL CHANNELS WERE CONSTRAINED TO DISCUSSIONS OF CONSTANT PRODUCT FORM AND INSTITUTIONS THAT HANDLED THE PRODUCT. SYSTEMS VIEW EXTENDED THE CHANNEL LENGTH FROM RAW MATERIAL TO LAND FILL. SYSTEMS VIEW INCLUDES NEW PLAYERS SUCH AS TRANSPORTATION FIRMS, BANKS, MARKET RESEARCH HOUSES, GOVERNMENT AGENCIES.
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RAW MATERIALS RECYCLE & LAND FILL
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TO STUDY ONE LEVEL AT A TIME
THE TRADITIONAL ECONOMIC VIEW OF CHANNELS WAS TO STUDY ONE LEVEL AT A TIME
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TO STUDY ONE LEVEL AT A TIME
THE TRADITIONAL ECONOMIC VIEW OF CHANNELS WAS TO STUDY ONE LEVEL AT A TIME
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TO STUDY ONE LEVEL AT A TIME
THE TRADITIONAL ECONOMIC VIEW OF CHANNELS WAS TO STUDY ONE LEVEL AT A TIME
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CHANNEL MEMBERS CAN MAKE MORE MONEY IF THEY COOPERATE THAN IF THEY COMPETE WITH EACH OTHER!
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TO COOPERATE ALL THE CHANNEL MEMBERS MUST ADOPT THE MARKETING CONCEPT AND TARGET THE SAME MARKET SEGEMENT OR SEGMENTS
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IDENTIFY TARGET MARKET
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DESIGN BACKWARDS FROM TARGET MARKET
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VERTICAL MARKETING SYSTEM
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DIFFERENT PERSPECTIVES
INSTITUTIONAL FUNCTIONAL SYSTEM FLOW RELATIONSHIP INTERACTIVE EVOLUTION OF THE THINGS CHANNEL MEMBERS AND TRADING PARTNERS DO FOR EACH OTHER
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Types of Vertical Marketing Systems p. 210
1) Administered System (Power-Based Leadership) Safeway, Walmart, P&G 2) Contractual Systems Most distribution systems Franchising system 3) Corporate vertical Gas stations Shell, BP Apple stores Ford, GM
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RELATIONSHIP MANAGEMENT
A CHANNEL IS MADE OF PEOPLE AND GROUPS OF PEOPLE DOING THINGS FOR AND TO EACH OTHER PLAYERS, ACTORS, COALITIONS THE PATTERN OF INTERDEPENDENT ACTIONS THAT ARE DONE BETWEEN PEOPLE IN A CHANNEL ARE ANTICIPATED AND CO-INTENDED ROLES, STRATEGIES, POLICIES, SCENARIOS COMMUNICATION AND PROMOTIONAL FLOWS BETWEEN CHANNEL MEMBERS IS BARGAINING, NEGOTIATION, JOINT PROBLEM SOLVING
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THE NEED FOR A RELATIONSHIP THAT ALLOWS FOR CONTINUAL NEGOTIATION, BARGAINING, AND JOINT PROBLEM SOLVING
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