1. What We Will Discuss Today u Distribution channels What are their functions? How are they organized? u Distribution channel decisions Design decisions Management decisions

2. Why Use Distribution Channels?

3. u To make the product or service available to consumers. risk cost

4. Why Use Distributors? u Efficiency u Information u Contact and promotion u Matching u Transportation and storage u Financing and risk taking u Negotiation

5. Direct Channels of Distribution u Manufacturer’s sales office u Manufacturer’s branch office u Catalog mail order

6. Indirect Channels of Distribution u Direct to retailer u Through wholesaler to retailer u Through wholesaler to jobber to retailer u Through exporter to freight forwarder to shipper to importer.....

7. Channel Behavior u Power u Conflict Horizontal Vertical u Trust

8. Trends in Marketing Channel Systems u Vertical Marketing Systems Corporate Contractual Administered u Horizontal Marketing Systems u Multi-channel Marketing Systems

9. Channel Design Decisions u Types of distributors u Number of distributors Intensive distribution Exclusive distribution Selective distribution

10. Alternative Evaluation Criteria u Economic u Control u Adaptive

11. Channel Management Decisions u Selecting channel members u Motivating channel members u Evaluating channel members

12. Wholesalers and Retailers u Mostly business customers u Larger trade areas, larger transactions u Less resources to promotion, atmosphere and location u Regulations and taxes

13. Why Direct Marketing? v Less shopping time v Costs of driving and lines v Toll free telephone numbers v Use of credit cards v Growth of computer power v Reduces high costs of reaching customers through sales people v Allows sellers greater selectivity

14. Forms of Direct Marketing u Direct Mail u Catalog Marketing u Telemarketing u TV Marketing

15. A Theory! Transaction Cost Analysis u Should an activity be performed within the organization by employees or should the organization contract with an external agent to perform the activity? Distribution

16. Transaction Cost Analsysis 2 u Examples: Make or buy Direct salesperson or manufacturer's representative In-house advertising or advertising agency

17. Transaction Cost Analysis 3 u Assumptions Humans are subject to bounded rationality Agents are given to opportunism

18. Factors Underlying Decision to Integrate u Asset Specificity u External Uncertainty Supply Uncertainty Demand Uncertainty u Frequency of Transactions

19. What We Discussed Today u Distribution channels What are their functions? How are they organized? u Distribution channel decisions Design decisions Management decisions