1. MARKETING CHANNELS: DELIVERING CUSTOMER VALUE
Yesenia Anaya Mendez
Maria Preciado
Avery Suazo-Greathouse
Martha Vidauri

2. Marketing / Distribution Channels
Interdependent organizations that help make a product or service available to consumers
Channel members add value
Because few producers sell their goods directly to a consumer. Instead, owners forge distribution channels to to help make a product or service available for use or consumption by the consumer or business users.
Channel decisions affect every other marketing decision. For example,
Pricing depends on whether the company works with national discount chains, sues high quality specialty stores, or sells directly to consumers via the web.
The firms’ sales force and communications decisions depend on how much persuasion, motivation, and support its channel partners need.
Whether a company develops or acquires certain new products may depend on how well those products fit the capabilities of its channel members.
Companies need to pay attention to their distribution channels to gain a competitive advantage.
Distribution channel decisions often involve long-term commitments to other firms.
Channel Members Add Value
Producers use intermediaries because they create greater efficiency in making goods available to target markets. Through their contacts, experience, specialization, and scale of operation, intermediaries usually offer the firm more than it can achieve on its own.
From the economic system’s point of view, the role of marketing intermediaries is to transform the assortments of products made by producers into the assortments wanted by consumers.

3. Supply Chain Concept Upstream Partners Downstream Partners
Supplies needed to create product
Downstream Partners
Marketing or Distribution Channels
Supply Chain
“Make and Sell”
Demand Chain
“Sense and Respond”
Upstream from the company is the set of firms that supply the raw materials, components, parts, information, finances, and expertise needed to create a product or service.
Marketers, however, have traditionally focused on the downstream side of the supply chain—the marketing channels (or distribution channels) that look toward the customer. Downstream marketing channel partners, such as wholesalers and retailers, form a vital link between the firm and its customers.
The term supply chain may be too limited, as it takes a make-and-sell view of the business. It suggests that raw materials, productive inputs, and factory capacity should serve as the starting point for market planning.
demand chain suggests a sense-and-respond view of the market. Under this view, planning starts by identifying the needs of target customers, to which the company responds by organizing a chain of resources and activities with the goal of creating customer value.

4. Supply Chain Concept Value Delivery Network
Partnerships improve performance of entire system
However, even a demand chain view of a business may be too limited because it takes a step-by-step, linear view of purchase-production-consumption activities. value delivery network is made up of the company, suppliers, distributors, and, ultimately, customers who “partner” with each other to improve the performance of the entire system.

5. Adding Value Through Channel Memberships
Information
Promotion
Contact
Matching
Negotiation
Physical Distribution
Financing
Risk Taking
information
gathering and distributing marketing research and information about forces in the marketing environment that are needed for planning and supporting exchange
Data Brokers
collecting, analyzing and packaging some of our most sensitive personal information and selling it as a commodity
promotion
developing and spreading persuasive communications about an offer
a marketing or advertising agency/organization
contact
finding and communicating with potential buyers
matching
customizing the offer to the buyers needs, including activities such as manufacturing, grading (quality and checking for defects), assembling, and packaging
negotiation
reaching an agreement on the price and terms of the offer so that ownership can be transferred
physical distribution
transporting and storing goods
financing
acquiring and using funds to cover the cost of the channel work
risk taking
assuming the risks of carrying out the channel work

6. Intermediaries Intermediaries Intensive Exclusive Selective
As many outlets as possible
Exclusive
Limited number of dealers
Selective
Use of some intermediaries
Producers use intermediaries because they create greater efficiency in making goods available to target markets. If offers the firm more than it can achieve on its own because of its contacts, experience, specialization and scale of operation. Pg. 342
Intermediaries reduce the amount of work that must be done by both producers and consumers. Help match supply and demand
Example: imagine shopping at a grocery store, you go and buy all the difference products that you need, how difficult would it be to have to go to different manufacturers in order to purchase your groceries.
Channel Level: a layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer. Pg. 343
Number of intermediary levels indicates the length of a channel.
For Example Channel 1 no intermediaries, Channel 2 1 intermediaries etc,.

7. Direct & Indirect Channels
Producer
Producer
Producer
Producer
Producer
Producer
Manufacturer’s representatives or sales branch
Wholesaler
Direct Marketing Channel no intermediaries, sells directly to consumers
Example: GEICO
Indirect Marketing Channel contains one or more intermediaries
Example: Companies that manufacture toothpaste and soap use a retailer as an intermediary to get the product to the consumers
More levels = less control for the producer and greater channel complexity Pg. 344
Connected by different flows:
Physical flow
Flow of ownership
Payment flow
Information flow
Business Distributor
Business Distributor
Retailer
Retailer
Business Consumer
Business Consumer
Business Consumer
Consumer
Consumer
Consumer

8. Channel Behavior Horizontal Conflict Vertical Conflict
channel conflict
Channel Behavior and Organization Marketing channel consists of firms that have partnered for their common good with each member playing a specialized role in which disagreements over marketing channel membres on goals, roles, and rewards occur
horizontal conflict
occurs among firms of the same level of channel
car companies complaining that others in the same city have stolen customers due to their low prices
vertical conflict
different levels of the same channel
different franchises of the same company in a disagreement over a product

9. Vertical Marketing Systems
Three Types of Systems
Corporate
Administered
Contract
Producer
Retailer
Wholesaler
CORPORATE : A vertical marketing system that combines successive stages of production and distribution under single ownership—channel leadership is established through common ownership. ( multiple stages of production all owned and operated by a single entity) Amazon and British Petroleum are both great examples of the Corporate Vertical Marketing system due to the fact that they are the producer, wholesaler, and retailer for products and goods that they sell. ADMINISTERED : A vertical marketing system that coordinates successive stages of production and distribution through the size and power of one of the parties. (the popularity and power of the company gives them control over the reseller) Gillette and Kraft are both HUGE companies whose products are renown for their quality and reliability, hence their dominant influence on the market and onto the resellers like Vons and Walmart. (EX End Caps)
CONTRACT : A vertical marketing system in which independent firms at different levels of production and distribution join together through contracts. (a form of subcontracting where multiple smaller firms provide their services for a bigger project/good, more FRANCHISING than anything). A large corporation whose head franchises itself to spread their business out to gain more profits over their territory. There are hundreds of these companies spread out around the world, for example: Coke sells their coke-syrup to sub-manufacturers to mass produce the product; KIA sells their cars to dealer franchises; and Hyatt has thousands of franchises of all shapes and sizes all around the world.
Consumer

10. Horizontal Marketing System
Creating New Opportunities through Partnerships
&
HMS : A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity. (Joining forces with other companies to create new opportunities). Companies do this type of marketing a lot to try to increase sales and profits by bringing users of the different (or sometimes similar) company to see and use their services. For example: Instagram (A picture and video sharing mobile-application) has a deal with Soundcloud (A sound-bit sharing service) to link both the pictures and sounds of users to enhance the user experience on Instagram and to help Soundcloud get more web and application hits. A similar situation happened a long time ago with Walmart and McDonalds when they noticed that they had similar demographics as McDonalds and decided to allow them to place a small McDonalds chain in almost every store in the U.S.

11. Multi-Channel Distribution System
Producer
Consumer Segment 1
Retailers
Consumer Segment 2
Distributor
Dealers
Business Segment 1
Business Segment 2
In the past, many companies used a single channel to sell to a single market or market segment. However, with today’s customer segments and the myriad of channel possibilities, more and more companies have adopted multichannel distribution systems.
Multichannel marketing occurs when a single firm sets up two or more marketing channels to reach one or more customer segments.
Looking at the chart above, we see the following:
Segment 1 shows the producer selling directly to the consumer. For example, the private eyewear company, Warby Parker, sells prescription eyeglasses and sunglasses directly to consumers online. They design glasses in-house and sell only to individuals.
Segment 2 shows that the producer reaches the final consumer through a retailer. For example, Burberry, the British company known for their high end coats, reaches consumers by having their coats at the retailer Nordstrom.
Segments 3 & 4 show similar patterns but instead the final consumer is a business.

12. Driscoll’s strawberries are grown on family farms in various regions throughout the world.
Farmers
in California (other parts of the U.S.), Mexico, Chile, and Argentina
Different steps (channels) within the farmers
research and development
don’t irradiate or genetically modify our plants.
Driscoll’s patented plants are available only to their independent farmers.
nursery
in different locations
when seeds are ready they are taken to the farms
growing
fighting with nature
delivery
to stores

13. Cooling / Processing Facility
Direct
Indirect
Farm
Farmers Market
Farm
Cooling / Processing Facility
Retailer
Consumer
Direct
some farmers sell directly to consumers
farmers markets
indirect
hand picked
inspected
bring to temperature 33 degrees F
put on pallets for transportation
taken to store

14. Driscoll’s Marketing Logistics
Supply Chain Management & Logistics
Warehousing
Inventory Management
Transportation
Logistics Information Management
Hand-picked in the Field and put in a nearby cooler that same afternoon.
Inspected for quality
Brought to optimal temperature
Pallet is wrapped for stability in shipping
Arrives fresh at the store

15. Tracking the Product from Farm to Consumer
What the tracking numbers mean
How they use them to track from farm to the

16. Tracking the Product from Farm to Consumer
What the tracking numbers mean
How they use them to track from farm to the

17. We learned that there are different channels that a business can take to get their product to consumers. Whether direct or indirect marketing channel are used the final channel is when the consumer purchases the product. The indirect method can be more difficult to work with because their are more channels involved.
REFLECTION

18. Sources
Kotler, P. & Armstrong, G. (2014). Principles of Marketing. Upper Saddle River, New Jersey: Pearson. Follow Us To The Farm. (n.d.). Driscoll's: Only the Finest Berries. Retrieved October 23, 2014, from Where to Buy. (n.d.). Driscoll's: Only the Finest Berries. Retrieved October 22, 2014, from