1. McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All Rights Reserved.

2. LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 15, YOU SHOULD BE ABLE TO:
Explain what is meant by a marketing channel of distribution and why intermediaries are needed.
LO1
Distinguish among traditional marketing channels, electronic marketing channels, and different types of vertical marketing systems.
LO2
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3. LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 15, YOU SHOULD BE ABLE TO:
Describe the factors and considerations that affect a company’s choice and management of a marketing channel.
LO3
Recognize how conflict, cooperation, and legal considerations affect marketing channel relationships.
LO4
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4. APPLE STORES: CREATING A HIGH-TOUCH CUSTOMER EXPERIENCE IN A HIGH-TECH MARKETING CHANNEL
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5. FIGURE The variety of terms used for marketing intermediaries that vary in specificity and use in consumer and business markets
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6. Functions Performed by Intermediaries
NATURE AND IMPORTANCE OF MARKETING CHANNELS THE VALUE CREATED BY INTERMEDIARIES
LO1
Marketing Channel
Functions Performed by Intermediaries
Transactional Function
Logistical Function
Facilitating Function
Utilities Received by Consumers
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7. FIGURE Intermediaries minimize transactions and the cost of distribution for producers and customers
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8. FIGURE Marketing channel intermediaries perform three functions, each consisting of different activities
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9. Direct Channel Indirect Channel
CHANNEL STRUCTURE & ORGANIZATION MARKETING CHANNELS FOR CONSUMER GOODS AND SERVICES
LO2
Direct Channel
Indirect Channel
Retailers
WholesalersRetailers
AgentsWholesalersRetailers
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10. FIGURE Common marketing channels for consumer offerings by the kind and number of intermediaries
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11. Direct Channel Indirect Channel
CHANNEL STRUCTURE & ORGANIZATION MARKETING CHANNELS FOR BUSINESS GOODS AND SERVICES
LO2
Direct Channel
Indirect Channel
Industrial Distributor
Agents
AgentsIndustrial Distributors
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12. FIGURE Common marketing channels for business offerings by the kind and number of intermediaries
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13. Electronic Marketing Channels
CHANNEL STRUCTURE & ORGANIZATION ELECTRONIC & DIRECT MARKETING CHANNELS; MULTICHANNEL MARKETING
LO2
Electronic Marketing Channels
Direct Marketing Channels
Multichannel Marketing
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14. FIGURE Consumer electronic marketing channels are similar to those for consumer and business offerings
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15. Strategic Channel Alliances
CHANNEL STRUCTURE & ORGANIZATION DUAL DISTRIBUTION & STRATEGIC CHANNEL ALLIANCES
LO2
Dual Distribution
Strategic Channel Alliances
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16. FIGURE 15-7 Functions performed by independent wholesaler types
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17. CHANNEL STRUCTURE & ORGANIZATION CHANNEL INTERMEDIARIES
LO2
Merchant Wholesalers
Full-Service Wholesalers
General Merchandise (Full-Line) Wholesalers
Specialty Merchandise (Limited-Line) Wholesalers
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18. CHANNEL STRUCTURE & ORGANIZATION CHANNEL INTERMEDIARIES
LO2
Merchant Wholesalers
Limited-Service Wholesalers
Rack Jobbers
Cash and Carry Wholesalers
Drop Shippers/Desk Jobbers
Truck Jobbers
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19. CHANNEL STRUCTURE & ORGANIZATION CHANNEL INTERMEDIARIES
LO2
Agents and Brokers
Manufacturer’s Agents
Selling Agents
Brokers
Manufacturers
Branch Offices
Sales Offices
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20. FIGURE Three types of vertical marketing systems: corporate, contractual (most popular), and administered
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21. CHANNEL STRUCTURE & ORGANIZATION VERICAL MARKETING SYSTEMS
LO2
Vertical Marketing Systems
Corporate Systems
Forward Integration
Backward Integration
Contractual Systems
Wholesaler-Sponsored Voluntary Chains
Retailer-Sponsored Cooperatives
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22. CHANNEL STRUCTURE & ORGANIZATION VERICAL MARKETING SYSTEMS
LO2
Contractual Systems
Franchising
Manufacturer-Sponsored Retail Franchise Systems
Manufacturer-Sponsored Wholesale Systems
Service-Sponsored Retail Franchise Systems
Service-Sponsored Franchise Systems
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23. Sherwin-Williams and H&R Block What vertical marketing system does each use?
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24. CHANNEL STRUCTURE & ORGANIZATION VERICAL MARKETING SYSTEMS
LO2
Administered Systems
Channel Partnership
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25. CHANNEL CHOICE AND MANAGEMENT FACTORS AFFECTING CHANNEL CHOICE
LO3
Environmental Factors
Consumer Factors
Product Factors
Company Factors
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26. CHANNEL CHOICE AND MANAGEMENT CHANNEL CHOICE CONSIDERATIONS
LO3
Target Market Coverage
Intensive Distribution
Exclusive Distribution
Selective Distribution
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27. CHANNEL CHOICE AND MANAGEMENT CHANNEL CHOICE CONSIDERATIONS
LO3
Satisfying Buyer Requirements
Information
Convenience
Variety
Pre- or Post-Sale Service
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28. Jiffy Lube and Petco What buyer requirements have been satisfied?
LO3
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29. GOING ONLINE Visit an Apple Store to See What All the Excitement is About
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30. CHANNEL CHOICE AND MANAGEMENT CHANNEL CHOICE CONSIDERATIONS
LO3
Profitability
Margins Earned
Channel Costs
Global Dimensions of Marketing Channels
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31. USING MARKETING DASHBOARDS Channel Sales and Profit at Charlesburg Furniture
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32. CHANNEL CHOICE AND MANAGEMENT CHANNEL RELATIONSHIPS
LO4
Sources of Channel Conflict
Vertical Conflict
Disintermediation
Horizontal Conflict
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33. CHANNEL CHOICE AND MANAGEMENT CHANNEL RELATIONSHIPS
LO4
Channel Captain
Channel Influence
Economic
Identification
Expertise
Legitimate Right
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34. CHANNEL CHOICE AND MANAGEMENT CHANNEL RELATIONSHIPS
LO4
Legal Considerations
Dual Distribution
Tying Arrangements
Vertical Integration
Refusal to Deal
Exclusive Dealing
Resale Restrictions
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35. FIGURE The Clayton Act and Sherman Act place legal restrictions on specific marketing channel strategies and practices
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36. GOLDEN VALLEY MICROWAVE FOODS: THE SURPRISING CHANNEL
VIDEO CASE 15
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37. GOLDEN VALLEY MICROWAVE FOODS
VIDEO CASE 15
GOLDEN VALLEY MICROWAVE FOODS
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38. GOLDEN VALLEY MICROWAVE FOODS
VIDEO CASE 15
GOLDEN VALLEY MICROWAVE FOODS
1. Visit ACT II’s website at and examine the assortment of products offered today. Are (a) the assortment or (b) the packaging related to Golden Valley’s distribution channels or the segments they serve?
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39. GOLDEN VALLEY MICROWAVE FOODS
VIDEO CASE 15
GOLDEN VALLEY MICROWAVE FOODS
2. Use Figure 15–4 to create a description of the channels of distribution being used by Golden Valley today.
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40. GOLDEN VALLEY MICROWAVE FOODS
VIDEO CASE 15
GOLDEN VALLEY MICROWAVE FOODS
3. Compared to selling through the non-grocery channels, what kind of product, price, and promotion strategies might Golden Valley use to reach the grocery channel more effectively?
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41. GOLDEN VALLEY MICROWAVE FOODS
VIDEO CASE 15
GOLDEN VALLEY MICROWAVE FOODS
4. What special marketing issues does Golden Valley face as it pursues growth in global markets?
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42. SUPPLEMENTAL LECTURE NOTE 15-1
TURNING EXCLUSIVE DISTRIBUTION ON ITS HEAD
SUPPLEMENTAL LECTURE NOTE 15-1
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43. MARKETING CHANNELS FOR APPLE
IN-CLASS ACTIVITY 15-1
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44. Apple Product Examples
MacBook Air
iMac
iPhone
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45. Apple Marketing Channel Structure: Apple Online Store—Direct Channel
Producer
Consumer
Customers
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46. Apple Marketing Channel Structure: Apple Retail Store—Direct Channel
Producer
Consumer
Customers
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47. Apple Marketing Channel Structure: Ingram Micro/Best Buy—Indirect Channel
Producer
Ingram
Micro
Wholesaler
Best Buy
Retailer
Consumer
Customers
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48. Apple Marketing Channel Structure: MacMall Retail Store/Online/Catalog—Indirect Channel
Producer
Retailer
MacMall
Consumer
Customers
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49. MARKETING CHANNELS FOR FASTENAL’S UNIQUE THREADED FASTENERS
IN-CLASS ACTIVITY 15-2
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50. Fastenal Fasteners (Unique Heads/Tops)
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51. FIGURE 15-5 Common marketing channels for business goods and services
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52. Marketing Channel
A marketing channel consists of Individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users.
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53. Industrial Distributor
An industrial distributor is an intermediary that performs a variety of marketing channel functions, including selling, stocking, delivering a full product assortment, and financing.
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54. Electronic Marketing Channels
Electronic marketing channels employ the Internet to make goods and services available for consumption or use by consumers or business buyers.
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55. Direct Marketing Channels
Direct marketing channels allow consumers to buy products by interacting with various advertising media without a face-to-face meeting with a salesperson.
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56. Multichannel Marketing
Multichannel marketing involves the blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in traditional intermediaries and online.
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57. Dual Distribution
Dual distribution involves an arrangement whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product.
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58. Strategic Channel Alliances
Strategic channel alliances is a practice whereby one firm’s marketing channel is used to sell another firm’s products.
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59. Merchant Wholesalers
Merchant wholesalers are independently owned firms that take title to the merchandise they handle.
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60. Manufacturer’s Agents
Manufacturer’s agents are agents who work for several producers and carry noncompetitive, complementary merchandise in an exclusive territory. Also called manufacturer’s representatives.
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61. Selling Agents
Selling agents are agents who represent a single producer and are responsible for the entire marketing function of that producer.
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62. Brokers
Brokers are independent firms or individuals whose principal function is to bring buyers and sellers together to make sales.
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63. Vertical Marketing Systems
Vertical marketing systems are professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact.
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64. Franchising
Franchising involves a contractual arrangement between a parent company (a franchisor) and an individual or firm (a franchisee) that allows the franchisee to operate a certain type of business under an established name and according to specific rules.
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65. Channel Partnership
A channel partnership consists of agreements and procedures among channel members for ordering and physically distributing a producer’s products through the channel to the ultimate consumer.
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66. Intensive Distribution
Intensive distribution is a level of distribution density whereby a firm tries to place its products and services in as many outlets as possible.
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67. Exclusive Distribution
Exclusive distribution is a level of distribution density whereby only one retail outlet in a specific geographical area carries the firm’s products.
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68. Selective Distribution
Selective distribution is a level of distribution density whereby a firm selects a few retail outlets in a specific geographical area to carry its products.
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69. Channel Conflict
Channel conflict arises when one channel member believes another channel member is engaged in behavior that prevents it from achieving its goals.
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70. Disintermediation
Disintermediation involves channel conflict that arises when a channel member bypasses another member and sells or buys products direct.
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71. Channel Captain
A channel captain is a channel member (producer, wholesaler, or retailer) that coordinates, directs, and supports other channel members.
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