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MARKETING CHANNEL
DEFINITION
A set of interpendent organizations that ease the transfer of
ownership as products move from producer to business user/consumer
THE CHANNEL MEMBERS
Members
-Intermediaries
-Resellers
-Middleman
Roles
To help producers sell their products
MARKETING CHANNEL FUNCTION
-Specialization & Division of labor
-Overcoming discrepancies
-Providing contract efficiency
SPECIALIZATION & DIVISION OF LABOR
- To provide efficiency and cost savings.
- To attain economic of scale.
OVERCOMING DISCREPANCIES
1) Discrepancies of quantity 4) Discrepancies of assortment
3) Temporal of discrepancies 5) Spartial Discrepancies
Discrepancies of Quantity
The difference between the amount of product produced & the amount consumer wants to buy
Discrepancies of Assortment
Occur when a consumer does not have all of the items necessary or needed to receive full satisfaction from a product
Temporal of discrepancies
A situation that occur when a product is produced but a customer is not ready to buy it
Spartial Discrepancies
The difference between the location of a producer & location
Providing Contact Efficiency
- Products available close to customers or residents and quantity is available always in the right quantity and at the right time.
TYPE
Retailer
A channel intermediary that sells mainly to customers
Merchant wholesaler
An institution that buys good from manufacturers, take title to goods,
stores, resells and ships them
Agents & Brokers
Wholesaling intermediaries who facilate the sale of a product by representing channel member
FUNCTION
Transactional functions Logistical functions Facilitating functions
-Contacting & Promoting -Physically distributing -Research
-Negotiating -Storing -Financing
-Risk taking -Sorting out
-Accumulation
-Allocation
-Assortment
CHANNEL STRUCTURES
For consumer products For business to business Alternative channel
-Direct channel -Direct channel(users) -Multiple channel
-Retailer channel -Industrial distributor -Non traditional channel
-Wholesaler channel -Agent/Broker channel -Strategic channel alliances
-Agent/Broker channel -Agent/Broker distributor channel
-Direct channel(government)
Alternatives Channel Arrangement
- Two or more channels selected is call dual distribution.
- Including the internet and mall-order channels.
- Producers use another manufacter's already established channel.
CHANNELS STRATEGIES
- Marketing channel strategy involves several critical decisions:
i) What role distribution will play in the overall marketing strategy.
ii) Consistency with product,promotion,and pricing strategies.
LEVEL OF DISTRIBUTION INTENSITY
Intensive Selective Exclusive
Definition Definition Definition
A form of distribution A form of disribution achieved A form of distribution
aimed at having a product by screening dealers to eliminate that established or a few
available in every oulet all but a few in any single area dealers within a given area
Objective Objective Objective
-Achieve mass market selling -Work with selected intermediaries -Work with single intermediaries
-Convenience goods -Shopping & some specialty goods -Specialty goods
Example of company Example of company Example of company
-Nestle -HP -BMW
-Coca Cola -Samsung -Apple
FACTORS AFFECTING CHANNEL CHOICE
Market factors Product factors Producer factors
-Target customers -Complex, customized & expensive products -Producer resources
-Geographic location -Delicacy of products -Number of product lines
-Size of the market -Bulky products -Desire for channel control
-Non standardized products
-PLC of product
These are Factors Affecting Channel Choice:
Arm’s length relationships
Integrated relationships
Cooperative relationships