1. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1 CHAPTER 14 Marketing Channels & Retailing © EIGHTFISH/Stone/Getty Images

2. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 2 Explain what a marketing channel is and why intermediaries are needed Marketing Channels

3. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 3 Marketing Channels A set of interdependent organizations that ease the transfer of ownership as products move from producer to business user or consumer. Marketing Channels Marketing Channels

4. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 4 Channels Channel Members Negotiate with one another, buy and sell products, and facilitate the change of ownership between buyer and seller in the course of moving the product from the manufacturer into the hands of the final consumer.

5. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 5 Marketing Channel Functions Specialization and division of labor Overcoming discrepancies Providing contact efficiency

6. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 6 Specialization and Division of Labor  Creates greater efficiency  Provides lower production costs  Achieves economies of scale  Aids producers who lack resources to market directly  Builds good relationships with customers

7. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 7 Overcoming Discrepancies Discrepancy of Quantity Discrepancy of Quantity Discrepancy of Assortment Discrepancy of Assortment The difference between the amount of product produced and the amount an end user wants to buy. The difference between the amount of product produced and the amount an end user wants to buy. The lack of all the items a customer needs to receive full satisfaction from a product or products. The lack of all the items a customer needs to receive full satisfaction from a product or products.

8. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 8 Overcoming Discrepancies Temporal Discrepancy Temporal Discrepancy Spatial Discrepancy Spatial Discrepancy A situation that occurs when a product is produced but a customer is not ready to buy it. A situation that occurs when a product is produced but a customer is not ready to buy it. The difference between the location of a producer and the location of widely scattered markets. The difference between the location of a producer and the location of widely scattered markets.

9. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 9 CONTACT EFFICIENCY: How Marketing Channels Reduce the Number of Required Transactions

10. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 10 Retailers Firms in the channel that sell directly to customers Retailers simplify distribution by cutting the number of transactions required by consumers, making an assortment of goods available in one location.

11. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 11 Channel Intermediaries Merchant Wholesaler Merchant Wholesaler An institution that buys goods from manufacturers, takes title to goods, stores them, and resells and ships them. Agents and Brokers Agents and Brokers Wholesaling intermediaries who facilitate the sale of a product by representing channel members.

12. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 12 Channel Intermediaries Merchant Wholesalers Merchant Wholesalers Agents and Brokers Agents and Brokers Take Title to Goods Do NOT Take Title to Goods

13. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 13 Channel Functions Performed by Intermediaries Contacting/Promotion Negotiating Risk Taking Researching Financing Physically distributing Storing Sorting Facilitating Functions Transactional Functions Logistical Functions Logistical Functions

14. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 14 Exhibit 14.2 Marketing Channels for Consumer Products

15. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 15 Channels for Consumer Products Direct Channel Direct Channel A distribution channel in which producers sell directly to consumers. © AP Photo/Matt Slocum

16. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 16 Describe the channel structures for consumer and business products and discuss alternative channel arrangements Channel Structures

17. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 17 Alternative Channel Arrangements Dual or Multiple channels Strategic channel alliances Nontraditional channels

18. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 18 Levels of Distribution Intensity Intensive A form of distribution aimed at having a product available in every outlet A form of distribution aimed at having a product available in every outlet Selective A form of distribution achieved by screening dealers to eliminate all but a few in any single area A form of distribution achieved by screening dealers to eliminate all but a few in any single area Exclusive A form of distribution that established one or a few dealers within a given area A form of distribution that established one or a few dealers within a given area

19. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 19 Levels of Distribution Intensity Intensive Achieve mass market selling. Convenience goods. Many Selective Exclusive Work with selected intermediaries. Shopping and some specialty goods. Work with single intermediary. Specialty goods and industrial equipment. Several One Intensity Level Objective Number of Intermediaries

20. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 20 Social Influences in Channels Partnering Conflict Leadership Control Power

21. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 21 Channel Power, Control, and Leadership Channel Power Channel Power A channel member’s capacity to control or influence the behavior of other channel members. A channel member’s capacity to control or influence the behavior of other channel members. Channel Control Channel Control A situation that occurs when one marketing channel member intentionally affects another member’s behavior. A situation that occurs when one marketing channel member intentionally affects another member’s behavior. Channel Captain A member of a marketing channel that exercises authority and power over the activities of other members. A member of a marketing channel that exercises authority and power over the activities of other members.

22. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 22 Channel Conflict Inequitable channel relationships often lead to channel conflict, which is a clash of goals and methods among the members of a distribution channel.

23. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 23 By cooperating, channel members can speed up inventory replenishment, improve customer service, and reduce the total costs of the marketing channel. Channel Partnering The joint effort of all channel members to create a channel that serves customers and creates a competitive advantage.

24. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 24 Explain the importance of the retailer within in the channel and within the national economy 24 The Role of Retailing 4

25. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 25 Retailing All the activities directly related to the sale of goods and services to the ultimate consumer for personal, non- business use.

26. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 26 The Role of Retailing  U.S. retailers employ nearly 15 million people  Retailers account for 10.8 percent of U.S. employment  Retailing accounts for 10 percent of U.S. businesses  Retailers account for two-thirds of the U.S. GDP  Industry is dominated by a few giant organizations, such as Walmart

27. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 27 Classification of Retail Operations Ownership Level of Service Product Assortment Price

28. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 28 Exhibit 14.4 Types of Stores and Their Characteristics Assort- ment Price Gross Margin Broad Narrow Broad Med-Narrow Medium Med-Broad Broad Med-Narrow Narrow Mod-High Moderate Mod High Moderate Mod Low Mod Lo-low Low-very low Low Low-High Mod High High Low Mod High Low Mod Low Low Low-High Type of Retailer Specialty Store Supermarket Convenience Store Drugstore Full-line Discounter Specialty Discounter Warehouse Clubs Off-price Retailer Restaurant Service Level Mod Hi-High High Low Low-Mod Mod-Low Low Low-High Department Store Broad Medium Mod-High Moderate Mod High Low Supermarket Drugstore Mod Hi-High Low Low-Mod Department Store

29. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 29 Independent Retailers Independent Retailers Chain Stores Franchises Owned by a single person or partnership and not part of a larger retail institution. Owned and operated as a group by a single organization. The right to operate a business or to sell a product. Classification of Ownership

30. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 30 Product Assortment Classification based on breadth and depth of product lines.

31. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 31 Price Gross Margin The amount of money the retailer makes as a percentage of sales after the cost of goods sold is subtracted.

32. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 32 Major Types of Retail Operations Department Stores Specialty Stores Supermarkets Drugstores Convenience Stores Discount Stores Off-Price Retailers Used Goods Retailers Restaurants

33. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 33 Nonstore Retailing Automatic Vending Direct Retailing Direct Marketing Telemarketing Direct Mail Shop-at-home TV Online

34. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 34 Top E-Tailers by Sales Volume America's Top Ten Retail Businesses RankCompanyWeb Sales Volume (in billions) 1Amazon.com Inc.$48.08 2Staples Inc.$10.6 3Apple Inc.$6.66 4Walmart.com$4.9 5Dell Inc.$4.6 6Office Depot Inc.$4.1 7Liberty Media (owns QVC) $3.76 8Sears$3.6 9Netflix Inc.$3.2 10CDW$3.0

35. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 35 The Basic Forms of Franchising Product and Trade Name Franchising Dealer agrees to sell in products provided by a manufacturer or wholesaler. Business Format Franchising Business Format Franchising An ongoing business relationship between a franchiser and a franchisee.

36. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 36 Top 10 New Franchises for 2013 1.Kona Ice 2.Menchie’s 3.Orange Leaf Frozen Yogurt 4.ShelfGenie 5.Bricks 4 Kidz 6.Smashburger 7.GameTruck 8.Paul Davis Emergency Services 9.Signal 88 Security 10.Mac Tools

37. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 37 Retail Promotion Strategy Public Relations Publicity Sales Promotion Advertising

38. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 38 The Proper Location Economic growth potential Competition Geography Choosing a Community

39. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 39 The Proper Location Land costs Zoning Regulations Public Transportation Mall Socioeconomic characteristics Traffic flows Choosing a Specific Site Choosing the Type of Site Freestanding Store Shopping Center

40. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 40 Retail Prices Quality Image High Price Low Price Good Value Single Price Point

41. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 41 Presentation of the Retail Store Employee type and density Fixture type and density Sound Odors Visual factors Merchandise type and density

42. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 42 Personnel Suggestion Selling Trading Up Two Common Selling Techniques

43. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 43 Channel and Retailing Decisions for Services Prioritize customer service by focusing on four areas: Minimizing wait times Managing service capacity Improving service delivery Establishing channel-wide network coherence

44. Chapter 13 Copyright ©2012 by Cengage Learning Inc. All rights reserved 44 New Developments in Retailing M-commerce Purchasing goods through mobile devices. Online retailers offer greater variety of options for delivery, including one- use package delivery boxes.