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PLACE AND DEVELOPMENT OF CHANNEL SYSTEMS
Transcript of PLACE AND DEVELOPMENT OF CHANNEL SYSTEMS
Discrepancies & Assortments
1. Discrepancy of Quality
the difference between the quantity of products it is economical for a producer to make and the quantity final users or consumers normally want.
2.Discrepancy of Assortment
the difference between the lines a typical producer makes and the assortment final consumers or users want.
1. Making bulk or Accumulating
Collecting products from many small producers
Adjusting Quantity Discrepancies
2. Bulk-breaking or Allocating
Dividing larger quantities into smaller quantities as products get closer to the final market
Adjusting Assortment discrepancies
- separating products into grades & qualities desired by different target markets
- putting together a variety of product to give a target market what it wants
Bits and Bytes need distribution too.
1. Marketing manager must choose type of channel relationship
2. The whole channel should have a product-market commitment
3. Traditional channel systems involve weak relationships
Conflicts in channels of distribution
1. Vertical conflicts
2. Horizontal conflicts
Channel Captain can guide channel relationships
Some producers lead their channels
Powerful retailers can lead channels
Managing Channel Conflicts
Vertical Marketing Systems
-A dominant force in the marketplace
Corporate Channel Systems
Administered Channel Systems
Firms that handle manufacturing, wholesaling, and retailing all at the same time. It has it’s pros and cons.
Informal agreement in sharing inventory and sales information over computer networks.
Agreement by contract to cooperate with each other.
Ideal Market Exposure
Sell it where they buy it
Sell it where it sells best
Let the product itself attract the customers’ attention
Multichannel & Reverse channels
Firms use more than one
channel of distribution
Downside of different channels
- Different mark ups
Several competing channels to reach the same target market
Examples – Apple – store,website,retailers
Zynga – Farmville,Cityville
Why multichannel distribution?
Retrieve products that customers no longer want or if the need arises
Ex. Repairs, warranties, buying errors
Ex. Eric Loves Mary Jane Deeply.
5 Basic Approaches
Consumer Product Classes
Business Product Classes
Product Life Cycle
-w/o much thought
-bought quickly, unplanned
-strongly felt of need
-immediate purchase when need is great
- see products different
-inspect for quality & suitability
-quality & style matters
-See the product same
Consumer really wants
Effort in finding it
-might be a need but not motivated to buy
-offer new ideas
2. Accessory equipments
3. Raw materials
6. Professional service
e-commerce, delivery services
Suitable intermediaries not available
Common with business customers and services
less investment in facility
reduce need for working capital
Help producers serve customer needs better & lower cost