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Chapter 12 Distribution Channels
Transcript of Chapter 12 Distribution Channels
and Logistics Management
A set of independent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user. Distribution Channel Why are
used? •To provide economies
•To match demand and supply Distribution channel functions • Information
• Physical distribution
• Risk taking A layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer.
•Direct and indirect marketing channel Channel level All of the institutions in the channel are connected by several types of flows:
Physical flow of product
The flow of ownership
The payment flow
The information flow
The promotion flow Channel conflict
Disagreement among marketing channel members on goals and roles.
Vertical conflict Vertical marketing system Corporate VMS Contractual VMS Administered VMS Successive stages
of production and
single ownership. Firms at different levels of production and distribution join together through contracts. •Wholesaler-sponsored voluntary chains Retailer cooperatives Franchise organizations Wholesalers organize voluntary chains of independent retailers to help them compete with large chain organizations. Retailers organize a new, jointly owned business to carry on wholesaling and possibly production. 2.Manufacturer-sponsored
wholesaler franchise system 1.Manufacturer-sponsored
retailer franchise system 3.Service firm-sponsored
retailer franchise system System that combines successive stages of production and distribution, not through common ownership or contractual ties but through the size and power of one of the parties. A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity. Horizontal marketing system Vertical Marketing System Hybrid marketing channelMultichannel distribution system