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. FIGURE The variety of terms used for marketing intermediaries that vary in specificity and use in consumer and business markets
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5. FIGURE Intermediaries minimize transactions and the cost of distribution for producers and customers
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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 Marketing channel intermediaries perform three functions, each consisting of different activities
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8. 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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9. FIGURE Common marketing channels for consumer offerings by the kind and number of intermediaries
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10. 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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11. FIGURE Common marketing channels for business offerings by the kind and number of intermediaries
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12. FIGURE Consumer electronic marketing channels are similar to those for consumer and business offerings
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13. Strategic Channel Alliances
CHANNEL STRUCTURE & ORGANIZATION DUAL DISTRIBUTION & STRATEGIC CHANNEL ALLIANCES
LO2
Dual Distribution
Strategic Channel Alliances
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14. FIGURE 15-7 Functions performed by independent wholesaler types
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15. 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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16. CHANNEL STRUCTURE & ORGANIZATION CHANNEL INTERMEDIARIES
LO2
Merchant Wholesalers
Limited-Service Wholesalers
Rack Jobbers
Cash and Carry Wholesalers
Drop Shippers/Desk Jobbers
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17. CHANNEL STRUCTURE & ORGANIZATION CHANNEL INTERMEDIARIES
LO2
Agents and Brokers
Manufacturer’s Agents
Selling Agents
Brokers
Manufacturers
Branch Offices
Sales Offices
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18. 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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19. 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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20. CHANNEL STRUCTURE & ORGANIZATION VERICAL MARKETING SYSTEMS
LO2
Administered Systems
Channel Partnership
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21. FIGURE Three types of vertical marketing systems: corporate, contractual (most popular), and administered
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22. CHANNEL CHOICE AND MANAGEMENT CHANNEL CHOICE CONSIDERATIONS
LO3
Target Market Coverage
Intensive Distribution
Exclusive Distribution
Selective Distribution
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23. Retail Store Distribution
Intensive
-many outlets as possible
-Convenience Goods
Selective
-Preferred group of
outlets in an area
-Shopping Goods
Exclusive
-One retail outlet per area
-Specialty Goods

24. CHANNEL CHOICE AND MANAGEMENT CHANNEL RELATIONSHIPS
LO4
Channel Captain
Channel Influence
Economic
Identification
Expertise
Legitimate Right
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25. FIGURE The Clayton Act and Sherman Act place legal restrictions on specific marketing channel strategies and practices
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26. 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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27. 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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28. 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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29. 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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30. 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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31. 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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32. 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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33. Merchant Wholesalers
Merchant wholesalers are independently owned firms that take title to the merchandise they handle.
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34. 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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35. 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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36. Brokers
Brokers are independent firms or individuals whose principal function is to bring buyers and sellers together to make sales.
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37. 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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38. 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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39. 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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40. 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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41. 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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42. 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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43. 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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44. Disintermediation
Disintermediation involves channel conflict that arises when a channel member bypasses another member and sells or buys products direct.
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45. 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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