Includes all the activities in selling goods or services to those who buy for resale or business sale.
Pay less attention to promotion, atmosphere, and location.
Transactions are usually larger and cover a larger trade area.
Different legal regulations and taxes.
What is marketing channel?
A marketing channel is a set of interdependent organizations involved in the process of making a product or service available for use or consumption.
Marketing channels make possible the flow of goods from producer , through intermediaries, to a buyer
Name 6 marketing intermediaries
Middleman
Agent/broker
Retailer
Distributor
Dealer
Marketing
Channel
Intermediaries make selling goods and services more efficient because the intermediaries minimize the number of sales contacts necessary to reach the target market. What are the 3 different functions of intermediaries ?
1) Transactional Function
2) Logistical Function
3) Facilitating Function
What Values are Created by Intermediaries ? Name five utilities.
Consumers have goods they want, when they want, where they want, in the form they want.
Marketing channels create value through five utilities
1. Time utility - refers to having a product or service when you want it
2. Place utility - having a product or service available where consumers want it
3. Form utility - involves enhancing a product or service to make it more appealing to buyer
4. Information utility - providing consumers with the information they need to make and informed choice.
5. Possession utility involves efforts to help buyers take possession of a product or services. (providing various ways for payment)
What two types of channels exist ?
Direct channel
Indirect channel
Consumer Goods Channels
Direct
A
Indirect B, C, and D
Business Goods Channels
Electronic Marketing Channel
What is dual (or multichanel) distribution
arrangement whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product
Firms pair with multibrand strategy to minimize cannibalization and differentiate the channels
Strategic Alliances - one firm's channel is used to sell another firm's products
What is Multichannel Marketing to the Online Consumer?
blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in both markets
Who is a Cross-channel Shopper?
researches online and purchases at a retail store
-Desire to compare among different retailers
-Need for more information than is in-store
-Ease of comparing options
What is Omni-Channel Retailing?
- seamless experience among all available shop-
ping channels
(booking.com)
Implementing Multichannel Marketing to the online consumer. Two types of websites
1) Transactional websites - electronic storefronts. Converts browser into an online catalogue,
2) Promotional websites - no actual sales take place
Global Channel Strategy. Distribution is of critical importance in global marketing. The availability and quality of retailers and wholesalers as well as transportation, communication, and warehousing facilities are often determined by a country's economic infrastructure
Distribution is of critical importance in global marketing. The availability and quality of retailers and wholesalers as well as transportation, communication, and warehousing facilities are often determined by a country's economic infrastructure
What is Vertical Marketing Systems?
Professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact
What is Corporate Vertical Systems ?
Under a corporate vertical marketing system, a firm at one level of a channel owns the firm at the next level or owns the entire channel
What is Contractual Vertical Marketing Systems ?
- Under a contractual vertical marketing system, independent production and distribution firms combine their efforts on a contractual basis to obtain greater functional economies and marketing impact than they could achieve alone. Contractual systems are the most popular among the three types of vertical marketing systems. They account for about 40 percent of all retail sales.
Three variations of contractual systems exist
Three variations of contractual systems exist
1) wholesaler-sponsored voluntary chains, involve a wholesaler that develops a contractual relationship with small, independent retailers to standardize and coordinate buying practices, merchandising programs, and inventory management efforts
2) Retailer-sponsored cooperatives exist when small, independent retailers form an organization that operates a wholesale facility cooperatively. Member retailers then concentrate their buying power through the wholesaler and plan collaborative promotional and pricing activities.
3) The most visible variation of contractual systems is franchising.
Four types of franchise arrangements are most popular.
1) Manufacturer-sponsored retail franchise systems . manufacturer such as Ford licenses dealers to sell its cars subject to various sales and service conditions.
2) Manufacturer-sponsored wholesale franchise systems appear in the soft-drink industry, where Pepsi-Cola licenses wholesalers (bottlers) that purchase concentrate from Pepsi-Cola and then carbonate, bottle, promote, and distribute its products to supermarkets and restaurants
3) Retail franchise systems are provided by firms that have designed a unique approach for selling merchandise to consumers. Canadian Tire and McDonald's represent this franchising approach
4) Service franchise systems exist when franchisers license individuals or firms to dispense a service under a trade name and specific guidelines. An example is H&R Block tax service
Marketing channels not only link a producer to its buyers but also provide the means through which a firm executes various elements of its marketing strategy. Therefore, choosing a marketing channel is a critical decision.
What Three Factors Affecting Channel Choice ?
The final choice of a marketing channel by a producer depends on a number of
1) market factors
2) product factors
3) and company factors
Channel Design Considerations. Marketing executives consider three questions when choosing a marketing channel and intermediaries:
1. Which channel and intermediaries will best reach the target market? Target market coverage
2. Which channel and intermediaries will best serve the needs of the target market? Satisfying buyer requirements
3. Which channel and intermediaries will lead to the most cost-efficient and profitable results? Profitability
Target market coverage. 3 degrees of distribution intensity exist
Intensive - a firm tries to place its products and services in as many outlets as possible. Intensive distribution is usually chosen for convenience products or services, such as candy, newspapers, and soft drinks
exclusive - only one retail outlet in a specified geographical area carries the firm's products. Exclusive distribution is typically chosen for specialty products or services such as specialty automobiles
or selective distribution - lies between these two extremes and means that a firm selects a few retail outlets in a specific geographical area to carry its products. usually associated with products such as Rolex watches, Levi's jeans, and Samsung flat-panel TVs.
The second objective in channel design is gaining access to channels and intermediaries that satisfy at least some of the interests buyers might have when they purchase a firm's products or services. These requirements fall into four categories:
1) Information - when buyers have limited knowledge or desire specific data about a product or service. Properly chosen intermediaries communicate with buyers through in-store displays, demonstrations, and personal selling. Apple and Sony have opened their own retail outlets
2) convenience - has multiple meanings for buyers, such as proximity or driving time to a retail outlet or hours of operation.
3) variety - reflects buyers' interest in having numerous competing and complementary items from which to choose. Variety is seen in both the breadth and depth of products carried by intermediaries, which enhances their attractiveness to buyers. Thus, manufacturers of pet food and supplies seek distribution through pet stores such as PetSmart and PJ's Pets.
4) pre- and/or post-sale services -
Channel Relationships: Conflict and Cooperation. channels consist of independent individuals and firms, there is always potential for disagreements. Channel conflict arises when one channel member believes another channel member is engaged in behaviour that prevents it from achieving its goals. Two types of conflict occur in marketing channels:
1) vertical conflict - occurs between different levels in a marketing channel—for example, between a manufacturer and a wholesaler.
Another type of vertical conflict arises when a channel member bypasses another member and sells directly to consumers, a practice called disintermediation. Apple is an excellent example of how disintermediation works
2) and horizontal conflict - between intermediaries at the same level in a marketing channel, such as between two or more retailers or two or more wholesalers that handle the same manufacturer's brands. For instance, one Toyota dealer might complain to Toyota that another Toyota dealer has located too close to its dealership and is affecting its business
Logistics and Supply Chain Management: What is Logistics ?
involves those activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible price
Expected level of customer service
Collaboration, coordination, and information sharing among manufacturers, suppliers, and distributions
Logistics and Supply Chain Management: What is Supply Chain ?
is a series of firms that perform activities required to create and deliver a good or service to consumers or industrial users.
Difference with marketing channel in terms of firms involved. A supply chain is longer and includes suppliers that provide raw materials inputs to a manufacturer as well as the wholesalers and retailers that deliver deliver finished goods to you
What is Supply Chain Management ?
integration & organization of information & logistics activities across firms in a supply chain for the purpose of creating and delivering goods and services that provide value to consumers
Aligning a Supply Chain with Marketing Strategy
Understand the customer- a company must identify the needs of the customer segment being served. These needs, such as a desire for a low price or convenience of purchase, help a company define the relative importance of efficiency and responsiveness in meeting customer requirements
Understand the supply chain- A company must understand what a supply chain is designed to do well. Supply chains range from those that emphasize being responsive to customer requirements and demand to those that emphasize efficiency with a goal of supplying products at the lowest possible delivered cost.
Harmonize the supply chain with the marketing strategy - needs to ensure that what the supply chain is capable of doing well is consistent with the targeted customer's needs and its marketing strategy.
four key logistics functions in a supply chain
1) transportation
2) order processing
3) Inventory management
4) Warehousing