1. © 2013 Cengage Learning. All Rights Reserved
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 

2. Channels of Distribution and Logistics10
Channels of Distribution and Logistics
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 

3. Marketing Framework

4. Place The market realigns discrepancies between buyers and sellers
Sellers have large quantities
Buyers want only a few
Breaking bulk

5. Distribution Channels
A network of firms which provides sellers a means of infusing the marketplace with their goods, and buyers a means of purchasing those goods
Channel members include
Manufacturers, wholesalers, retailers, consumers, etc.

6. Functions of a Channel Customer-oriented Product-oriented
Marketing-centric
Logistics

7. Channel Tension
All channel functions must be done by someone, the question is…
What is the most effective and efficient way to distribute the product?
Tension in channels can be created by each channel member

8. Channels and Supply Chains
Upstream partners
Channel members
Downstream partners

9. How to Design Channels Intensive distribution Selective distribution
Exclusive distribution

10. How to Design Channels Pull strategy Push strategy
Incentives are offered to consumers to pull products through the channel
Push strategy
Incentives are offered to distribution partners to push products through the channel

11. Power and Conflict in Channels
Conflict arises in distribution channels
Power is usually defined by size
Having power can be effective
However, exerting power over distribution partners can lead to resentment and further lack of cooperation

12. Power and Conflict in Channels
Transaction cost analysis (TCA)
Model that considers channel members’ production and governance costs
Production and governance costs
Transaction value analysis
A perspective that emphasizes the benefits a company brings to its partners

13. Power and Conflict in Channels
Ways to resolve conflict
Enhance communication to build trust
Exchange personnel to better understand members’ perspectives
Mediation
Arbitration

14. Revenue Sharing Double Marginalization The manufacturer wants a markup
The retailer wants a second markup

15. Revenue Sharing
Double Marginalization Solution

16. Integration
Remember…all of the functions within a channel need to be completed
The question is, “Who should complete them?”
Make decision
Complete functions yourself
Buy decision
Outsource functions

17. Integration Vertical integration
Forward integration
Backward integration
Private labels give retailers benefits

18. Retailing Classifications
Management’s level of ownership
Independent retailers
Branded store chains
Franchises
Level of service provided
Full or limited service
Product assortment carried
Specialty or general merchandise

19. Retailing Employees/Operations
Retail employees are important
Retailers should hire selectively, train well and pair fairly
Retailers should flowchart operations
Front-stage
Back-stage

20. Retailing Location Location is important
Determine appropriate success factors for your specific business; analyze locations to pick ideal sites

21. Retailing Growth Strategies
Provide additional services
Target additional segments
Open multiple stores
Expand internationally

22. Franchising Franchising Types of franchising
Company can retain some control without complete ownership or capital expenditure
Types of franchising
Product franchising
Business format franchising

23. E-Commerce and Catalog Sales
The Internet is an important channel
Online retail sales are about $175 billion, growing about 10% a year
Internet is well-suited for a search while catalogs still dominate browsing

24. Sales Force Utilized extensively with a push strategy
Important with undifferentiated products
Sales force compensation
Sales force evaluation factors
Sales force size

25. Integrated Marketing Channels
As the number of channels proliferates, increasing care must be taken to coordinate and integrate across them
Know your customer!

26. Managerial Recap
Distribution channels are the link from the manufacturer to the customer
Numerous thoughtful decisions must be made in designing channels

27. Managerial Recap
Channel entities are independent yet interdependent organizations; thus, conflicts may arise
Conflicts are best addressed by employing good communication and trust, revenue sharing, or greater vertical integration