1. MGT301 Principles of Marketing Lecture-28

2. Summary of Lecture-27

4. Today’s Topics

6. Place….Distribution Channel….Marketing Channel

7. Marketing Channel A set of interdependent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user.

8. Simple Marketing System Producer/SellerConsumer Communication Product/Service Money Feedback

9. How Intermediaries Minimize Transactions?

10. 20 Contacts Manufacturer Customer

11. 9 Contacts Manufacturer Customer Wholesaling Intermediary

12. Why are Marketing Intermediaries Used?

13.  Greater efficiency in making goods available to target markets.  Offer the firm more than it can achieve on it’s own through the intermediaries: –Contacts –Experience –Specialization –Scale of operation  Match supply and demand.

14. Channel members add value by bridging the major time, place and possession gaps that separate goods and services from those who would use them. How Channel Members Add Value?

15. Contact Financing Information Risk Taking Promotion Matching Negotiation Physical Distribution Physical Distribution Distribution Channel Functions

16.  Direct Channel: when a producer and ultimate consumer deal directly with each other. -e.g. electronic marketing channels  Indirect Channel: when intermediaries are inserted between the producer and consumers and perform numerous channel functions. Direct and Indirect Channels

17. M M W W J J R R C C  M M W W R R C C  M M R R C C  M M C C Channel 1 Channel 2 Channel 3 Channel 4 Direct In-Direct

18. Marketing Channels for Consumer Goods

19. Producer Agent/ Broker WholesalerRetailerConsumer Producer WholesalerRetailerConsumer ProducerRetailerConsumer ProducerConsumer

20. Producer Agent/ Broker Wholesaler Business User ProducerWholesaler Business User Producer Business User Producer Business User Agent/ Broker Marketing Channels for Business Goods

21. Industrial distributors Manufacturer Consumer Manufacturer’s representative Manufacturer’s sales branch Industrial Marketing Channels

24. The channel will be most effective when..  Each member is assigned tasks it can do best.  All members cooperate to attain overall channel goals and satisfy the target market. Channel Behavior & Conflict

25. When this doesn’t happen, conflict occurs..  Horizontal Conflict occurs among firms at the same level of the channel.  Vertical Conflict occurs between different levels of the same channel. For the channel to perform well, conflict must be managed.

26. Conventional Distribution Channel vs. Vertical Marketing Systems

27. VerticalMarketingChannel Manufacturer Retailer ConventionalMarketingChannel Consumer Manufacturer ConsumerRetailer Wholesaler

28. Vertical marketing systems are professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact.

29. Types of Vertical Marketing Systems

30. Corporate Common Ownership at Different Levels of the Channel Corporate Common Ownership at Different Levels of the Channel Contractual Contractual Agreement Among Channel Members Contractual Contractual Agreement Among Channel Members Administered Leadership is Assumed by One or a Few Dominant Members Administered Leadership is Assumed by One or a Few Dominant Members

31. Franchising is 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 according to specific rules. Franchising

32. Innovations in Marketing Systems

33. Two or More Companies at One Channel Level Join Together to Follow a New Marketing Opportunity. Example: Banks in Grocery Stores Horizontal Marketing System

34. Hybrid Marketing System A Single Firm Sets Up Two or More Marketing Channels to Reach One or More Customer Segments. Example: Retailers, Catalogs, and Sales Force

35. Channel Design Decisions

36. Channel Design Considerations 1. Length and width of distribution strategy -Number and types of intermediaries -Direct vs. indirect channels 2. Type of arrangement -Conventional vs. vertical marketing systems 3. Distribution coverage strategy -Exclusive, selective or intensive -Service quality

37. Channel Design Decisions

38. Analyzing Consumer Service Needs Setting Channel Objectives & Constraints Exclusive Distribution Exclusive Distribution Selective Distribution Selective Distribution Intensive Distribution Intensive Distribution Identifying Major Alternatives Evaluating the Major Alternatives

39. Intensive Distribution Selective Distribution Exclusive Distribution

40. Analyzing Consumer Service Needs Setting Channel Objectives & Constraints Exclusive Distribution Exclusive Distribution Selective Distribution Selective Distribution Intensive Distribution Intensive Distribution Identifying Major Alternatives Evaluating the Major Alternatives

41. Evaluation of Channel Alternatives

42.  Economic Criteria -Potential sales, costs and profits of channels  Control Criteria -Amount of control company has over sales efforts  Adaptive Criteria -flexibility of channel to adapt to changing situations

43. Channel Capabilities and Costs Channel Capabilities and Costs Channel Compatibility Channel Compatibility Availability

44. Channel Management Decisions

45. Selecting Motivating Evaluating FEEDBACK

46. Selecting FEEDBACK Motivating Training Evaluating

47. Managing Marketing Channels Evaluate Channel Per- formance Implement Channel Strategy Determine Channel Structure Evaluate Channel Alter- natives Develop Channel Strategy and Objectives Formulate Firm’s Marketing Objectives & Strategy Formulate Firm’s Marketing Objectives & Strategy

48. Enough for today...

49. Summary

51. 20 Contacts Manufacturer Customer

52. 9 Contacts Manufacturer Customer Wholesaling Intermediary

53. Producer Agent/ Broker WholesalerRetailerConsumer Producer WholesalerRetailerConsumer ProducerRetailerConsumer ProducerConsumer Marketing Channels for Consumer Goods

54. Producer Agent/ Broker Wholesaler Business User ProducerWholesaler Business User Producer Business User Producer Business User Agent/ Broker Marketing Channels for Business Goods

55. Channel Design Decisions

56. Analyzing Consumer Service Needs Setting Channel Objectives & Constraints Exclusive Distribution Exclusive Distribution Selective Distribution Selective Distribution Intensive Distribution Intensive Distribution Identifying Major Alternatives Evaluating the Major Alternatives

57. Channel Management Decisions

58. Selecting Motivating Evaluating FEEDBACK

59. Nature and Importance of Marketing Logistics Next….

60. MGT301 Principles of Marketing Lecture-28