Description
It covers retailers,wholesalers,agent,brokers,channel functions,division of labor,channel relationship,conflict,channel partner
Marketing Channels
1
Agenda :
? What a marketing channel is and why intermediaries are needed. Define the types of channel intermediaries and describe their functions and activities. Describe the channel structures for business-to-business products and discuss alternative channel arrangements. Discuss the issues that influence channel strategy. Explain channel leadership, conflict, and partnering. Channels and distribution decisions in global markets. ? ? ? ? ?
Definition of marketing channel and why intermediaries are needed
3
Marketing Channels
A set of interdependent organizations A set of interdependent organizations Marketing that ease the transfer of ownership as Marketing that ease the transfer of ownership as Channel products move from producer to Channel products move from producer to business user or consumer. business user or consumer. The connected chain of all the business The connected chain of all the business entities, both internal and external to entities, both internal and external to the company, that perform or support the company, that perform or support the logistics function. the logistics function.
4
Supply Supply Chain Chain
Why Intermediaries are needed
The industrial intermediaries play a vital role in helping the marketers to sell their products to the customers Help the customers in choosing the best products for their requirements. They help the supplier by providing the information, stocking inventory, etc. They serve the industrial customer by providing transportation and delivery services, financing the sale, value addition,
Define the types of channel intermediaries and describe their functions and activities.
6
Types of Channel Intermediaries
Retailer Retailer A channel intermediary that A channel intermediary that sells mainly to customers. sells mainly to customers. An institution that buys goods An institution that buys goods from manufacturers, takes title from manufacturers, takes title to goods, stores them, to goods, stores them, and resells and ships them. and resells and ships them. Wholesaling intermediaries who Wholesaling intermediaries who facilitate the sale of a product by facilitate the sale of a product by representing channel member. representing channel member.
7
Merchant Merchant Wholesaler Wholesaler
Agents and Agents and Brokers Brokers
Channel Intermediaries
Retailers Retailers Merchant Merchant Wholesalers Wholesalers Agents Agents and and Brokers Brokers Take Title to Goods Take Title to Goods
Take Title to Goods Take Title to Goods
Do NOT Take Title to Goods Do NOT Take Title to Goods
8
Marketing Channel Functions
Specialization and Specialization and Division of Labor Division of Labor Channels Channels Fulfill Fulfill Three Three Important Important Functions Functions
Overcoming Overcoming Discrepancies Discrepancies
Providing Contact Providing Contact Efficiency Efficiency
9
Specialization and Division of Labor
?
Provides economies of scale Aids producers who lack resources to market directly Builds good relationships with customers
?
?
10
Overcoming Discrepancies
Discrepancy Discrepancy of of Quantity Quantity The difference between the amount The difference between the amount of product produced and the of product produced and the amount an end user wants to buy. amount an end user wants to buy. The lack of all the items a The lack of all the items a customer needs to receive full customer needs to receive full satisfaction from a product or satisfaction from a product or products. products.
Discrepancy Discrepancy of of Assortment Assortment
11
Overcoming Discrepancies
Temporal Temporal Discrepancy Discrepancy A situation that occurs when a A situation that occurs when a product is produced but a product is produced but a customer is not ready to buy it. customer is not ready to buy it. The difference between the The difference between the location of a producer and the location location of a producer and the location of widely of widely scattered markets. scattered markets.
Spatial Spatial Discrepancy Discrepancy
12
Contact Efficiency
Dell Dell Sony Sony HP HP Toshiba Toshiba
Dell Dell
Sony Sony
HP HP
Toshiba Toshiba
Vijay Sales Vijay Sales
13
Channel Functions Performed by Intermediaries
Transactional Transactional Functions Functions Negotiating Risk Taking
Contacting/Promotion
Physically distributing Logistical Logistical Functions Functions Storing Sorting Researching Financing
14
Chapter 12 Version 6e
Facilitating Facilitating Function Function
Logistics
Logistics is concerned with the storage and transportation of goods and information from the place of origin to the place of consumption. It is broadly divided into two categories namely physical supply and physical distribution. Physical supply deals with the transportation of the goods from the supplier to the manufacturer and the storage of raw material used for work in progress. Physical distribution is concerned with transportation and storage of the finished goods from the manufacturer to the customer. Cost is an important aspect in the logistics function. Every sub-function of logistics is associated with some cost and the logistics function as a whole proves to be effective only 15 when its total cost is minimized
Selection of Channels:
The criteria for selecting an intermediary are product line coverage, after-sales service, pricing strategy, sales, size, experience of the intermediary, and risks involved in selecting the intermediary.
16
Describe the channel structures for business-to-business products
17
Direct Channel
A distribution channel in which producers sell directly to consumers.
18
Direct Channel
Channels for Business-to-Business Products
Producer
Industrial Agent/Broker Agent/Broker Direct Distributor Channel Channel Industrial Channel Producer Producer Producer Producer
Agents or Brokers Industrial Distributor Industrial User Industrial User Industrial User
Agents or Brokers Industrial Distributor Industrial Government User Buyer 19
Discuss the issues that influence channel strategy.
20
Channel Strategy Decisions
Issues that Influence Issues that Influence Channel Strategy Channel Strategy Factors Factors Affecting Affecting Channel Channel Choice Choice Market Factors Market Factors Product Factors Product Factors Producer Factors Producer Factors
Levels of Levels of Distribution Distribution Intensity Intensity
Intensive Distribution Intensive Distribution Selective Distribution Selective Distribution Exclusive Distribution Exclusive Distribution
21
Market Factors
Customer Profiles Customer Profiles
Consumer or Industrial Consumer or Industrial Customer Customer Size of Market Size of Market
Market Factors Market Factors That Affect That Affect Channel Channel Choices Choices
Geographic Location 22
Product Factors
Product Complexity Product Complexity
Product Price Product Price
Product Factors Product Factors That Affect That Affect Channel Channel Choices Choices
Product Life Cycle Product Life Cycle
Product Delicacy Product Delicacy
23
Producer Factors
Producer Resources Producer Resources
Number of Product Lines Number of Product Lines Producer Factors Producer Factors That Affect That Affect Channel Channel Choices Choices
Desire for Channel Control Desire for Channel Control
24
Levels of Distribution Intensity
Intensity Level Intensity Level Objective Objective Number of Number of Intermediaries Intermediaries Achieve mass market Achieve mass market selling. selling. Convenience goods. Convenience goods. Work with selected Work with selected intermediaries. intermediaries. Shopping and some Shopping and some specialty goods. specialty goods. Work with single Work with single intermediary. Specialty intermediary. Specialty goods and industrial goods and industrial equipment. equipment.
Intensive Intensive
Many Many
Selective Selective
Several Several
Exclusive Exclusive
One One
25
Explain channel leadership, conflict, and partnering.
26
Managing Channel Relationships
Channel Power Channel Power Channel Control Channel Control Channel Leadership Channel Leadership Channel Conflict Channel Conflict Channel Partnering Channel Partnering
27
Social Social Dimensions Dimensions of Channels of Channels
Channel Power, Control, and Leadership
Channel Channel Power Power A channel member’s capacity to control or A channel member’s capacity to control or influence the behavior influence the behavior of other channel members of other channel members
Channel Channel Control Control
A situation that occurs when one marketing A situation that occurs when one marketing channel member intentionally affects another channel member intentionally affects another member’s behavior. member’s behavior.
Channel Channel Leader Leader
A member of a marketing channel A member of a marketing channel that exercises authority/power over the that exercises authority/power over the activities of other members. activities of other members.
28
Channel conflicts arise due to many factors like goal incompatibility, clash over domains, and performance of channel functions. Conflicts may be either pre-contractual or postcontractual. Conflicts may occur within and between different levels of a channel, or between two parallel channels. Channel conflicts can be solved by applying various strategies like negotiation and bargaining, persuasion mechanisms, problem-solving strategies, political strategies, and cooptation
29
Channel Conflict
A clash of goals and methods between distribution channel members.
Horizontal Horizontal Conflict Conflict Vertical Vertical Conflict Conflict Occurs among channel members Occurs among channel members on the same level on the same level Occurs among channel members Occurs among channel members at different levels at different levels
30
Channel Partnering
The joint effort of all channel members to create a supply chain that serves customers and creates a competitive advantage.
31
Channels and distribution decisions in global markets.
32
Channels and Distribution Decisions for Global Markets
Channel structure differs Global Channel Global Channel Development Development Channel types differ “Gray” marketing channels Awareness of trade legalities Global Supply Global Supply Chain Management Chain Management Transportation Infrastructure
33
Thank You
34
doc_324294499.ppt
It covers retailers,wholesalers,agent,brokers,channel functions,division of labor,channel relationship,conflict,channel partner
Marketing Channels
1
Agenda :
? What a marketing channel is and why intermediaries are needed. Define the types of channel intermediaries and describe their functions and activities. Describe the channel structures for business-to-business products and discuss alternative channel arrangements. Discuss the issues that influence channel strategy. Explain channel leadership, conflict, and partnering. Channels and distribution decisions in global markets. ? ? ? ? ?
Definition of marketing channel and why intermediaries are needed
3
Marketing Channels
A set of interdependent organizations A set of interdependent organizations Marketing that ease the transfer of ownership as Marketing that ease the transfer of ownership as Channel products move from producer to Channel products move from producer to business user or consumer. business user or consumer. The connected chain of all the business The connected chain of all the business entities, both internal and external to entities, both internal and external to the company, that perform or support the company, that perform or support the logistics function. the logistics function.
4
Supply Supply Chain Chain
Why Intermediaries are needed
The industrial intermediaries play a vital role in helping the marketers to sell their products to the customers Help the customers in choosing the best products for their requirements. They help the supplier by providing the information, stocking inventory, etc. They serve the industrial customer by providing transportation and delivery services, financing the sale, value addition,
Define the types of channel intermediaries and describe their functions and activities.
6
Types of Channel Intermediaries
Retailer Retailer A channel intermediary that A channel intermediary that sells mainly to customers. sells mainly to customers. An institution that buys goods An institution that buys goods from manufacturers, takes title from manufacturers, takes title to goods, stores them, to goods, stores them, and resells and ships them. and resells and ships them. Wholesaling intermediaries who Wholesaling intermediaries who facilitate the sale of a product by facilitate the sale of a product by representing channel member. representing channel member.
7
Merchant Merchant Wholesaler Wholesaler
Agents and Agents and Brokers Brokers
Channel Intermediaries
Retailers Retailers Merchant Merchant Wholesalers Wholesalers Agents Agents and and Brokers Brokers Take Title to Goods Take Title to Goods
Take Title to Goods Take Title to Goods
Do NOT Take Title to Goods Do NOT Take Title to Goods
8
Marketing Channel Functions
Specialization and Specialization and Division of Labor Division of Labor Channels Channels Fulfill Fulfill Three Three Important Important Functions Functions
Overcoming Overcoming Discrepancies Discrepancies
Providing Contact Providing Contact Efficiency Efficiency
9
Specialization and Division of Labor
?
Provides economies of scale Aids producers who lack resources to market directly Builds good relationships with customers
?
?
10
Overcoming Discrepancies
Discrepancy Discrepancy of of Quantity Quantity The difference between the amount The difference between the amount of product produced and the of product produced and the amount an end user wants to buy. amount an end user wants to buy. The lack of all the items a The lack of all the items a customer needs to receive full customer needs to receive full satisfaction from a product or satisfaction from a product or products. products.
Discrepancy Discrepancy of of Assortment Assortment
11
Overcoming Discrepancies
Temporal Temporal Discrepancy Discrepancy A situation that occurs when a A situation that occurs when a product is produced but a product is produced but a customer is not ready to buy it. customer is not ready to buy it. The difference between the The difference between the location of a producer and the location location of a producer and the location of widely of widely scattered markets. scattered markets.
Spatial Spatial Discrepancy Discrepancy
12
Contact Efficiency
Dell Dell Sony Sony HP HP Toshiba Toshiba
Dell Dell
Sony Sony
HP HP
Toshiba Toshiba
Vijay Sales Vijay Sales
13
Channel Functions Performed by Intermediaries
Transactional Transactional Functions Functions Negotiating Risk Taking
Contacting/Promotion
Physically distributing Logistical Logistical Functions Functions Storing Sorting Researching Financing
14
Chapter 12 Version 6e
Facilitating Facilitating Function Function
Logistics
Logistics is concerned with the storage and transportation of goods and information from the place of origin to the place of consumption. It is broadly divided into two categories namely physical supply and physical distribution. Physical supply deals with the transportation of the goods from the supplier to the manufacturer and the storage of raw material used for work in progress. Physical distribution is concerned with transportation and storage of the finished goods from the manufacturer to the customer. Cost is an important aspect in the logistics function. Every sub-function of logistics is associated with some cost and the logistics function as a whole proves to be effective only 15 when its total cost is minimized
Selection of Channels:
The criteria for selecting an intermediary are product line coverage, after-sales service, pricing strategy, sales, size, experience of the intermediary, and risks involved in selecting the intermediary.
16
Describe the channel structures for business-to-business products
17
Direct Channel
A distribution channel in which producers sell directly to consumers.
18
Direct Channel
Channels for Business-to-Business Products
Producer
Industrial Agent/Broker Agent/Broker Direct Distributor Channel Channel Industrial Channel Producer Producer Producer Producer
Agents or Brokers Industrial Distributor Industrial User Industrial User Industrial User
Agents or Brokers Industrial Distributor Industrial Government User Buyer 19
Discuss the issues that influence channel strategy.
20
Channel Strategy Decisions
Issues that Influence Issues that Influence Channel Strategy Channel Strategy Factors Factors Affecting Affecting Channel Channel Choice Choice Market Factors Market Factors Product Factors Product Factors Producer Factors Producer Factors
Levels of Levels of Distribution Distribution Intensity Intensity
Intensive Distribution Intensive Distribution Selective Distribution Selective Distribution Exclusive Distribution Exclusive Distribution
21
Market Factors
Customer Profiles Customer Profiles
Consumer or Industrial Consumer or Industrial Customer Customer Size of Market Size of Market
Market Factors Market Factors That Affect That Affect Channel Channel Choices Choices
Geographic Location 22
Product Factors
Product Complexity Product Complexity
Product Price Product Price
Product Factors Product Factors That Affect That Affect Channel Channel Choices Choices
Product Life Cycle Product Life Cycle
Product Delicacy Product Delicacy
23
Producer Factors
Producer Resources Producer Resources
Number of Product Lines Number of Product Lines Producer Factors Producer Factors That Affect That Affect Channel Channel Choices Choices
Desire for Channel Control Desire for Channel Control
24
Levels of Distribution Intensity
Intensity Level Intensity Level Objective Objective Number of Number of Intermediaries Intermediaries Achieve mass market Achieve mass market selling. selling. Convenience goods. Convenience goods. Work with selected Work with selected intermediaries. intermediaries. Shopping and some Shopping and some specialty goods. specialty goods. Work with single Work with single intermediary. Specialty intermediary. Specialty goods and industrial goods and industrial equipment. equipment.
Intensive Intensive
Many Many
Selective Selective
Several Several
Exclusive Exclusive
One One
25
Explain channel leadership, conflict, and partnering.
26
Managing Channel Relationships
Channel Power Channel Power Channel Control Channel Control Channel Leadership Channel Leadership Channel Conflict Channel Conflict Channel Partnering Channel Partnering
27
Social Social Dimensions Dimensions of Channels of Channels
Channel Power, Control, and Leadership
Channel Channel Power Power A channel member’s capacity to control or A channel member’s capacity to control or influence the behavior influence the behavior of other channel members of other channel members
Channel Channel Control Control
A situation that occurs when one marketing A situation that occurs when one marketing channel member intentionally affects another channel member intentionally affects another member’s behavior. member’s behavior.
Channel Channel Leader Leader
A member of a marketing channel A member of a marketing channel that exercises authority/power over the that exercises authority/power over the activities of other members. activities of other members.
28
Channel conflicts arise due to many factors like goal incompatibility, clash over domains, and performance of channel functions. Conflicts may be either pre-contractual or postcontractual. Conflicts may occur within and between different levels of a channel, or between two parallel channels. Channel conflicts can be solved by applying various strategies like negotiation and bargaining, persuasion mechanisms, problem-solving strategies, political strategies, and cooptation
29
Channel Conflict
A clash of goals and methods between distribution channel members.
Horizontal Horizontal Conflict Conflict Vertical Vertical Conflict Conflict Occurs among channel members Occurs among channel members on the same level on the same level Occurs among channel members Occurs among channel members at different levels at different levels
30
Channel Partnering
The joint effort of all channel members to create a supply chain that serves customers and creates a competitive advantage.
31
Channels and distribution decisions in global markets.
32
Channels and Distribution Decisions for Global Markets
Channel structure differs Global Channel Global Channel Development Development Channel types differ “Gray” marketing channels Awareness of trade legalities Global Supply Global Supply Chain Management Chain Management Transportation Infrastructure
33
Thank You
34
doc_324294499.ppt