1. Marketing Channels and SupplyMarketing Channels and Supply
Chain ManagementChain Management
10
2. 10-2
Marketing or Distribution
Channel
• A set of interdependent organizationsA set of interdependent organizations
involved in the process of making ainvolved in the process of making a
product or service available for use orproduct or service available for use or
consumption by the consumer or businessconsumption by the consumer or business
user.user.
5. 10-5
Channel Behavior
• The channel will be most effective when:The channel will be most effective when:
– each member is assigned tasks it can do best.each member is assigned tasks it can do best.
– all members cooperate to attain overall channelall members cooperate to attain overall channel
goals.goals.
• If this does not happen, conflict occurs:If this does not happen, conflict occurs:
– Horizontal ConflictHorizontal Conflict occurs among firms at the sameoccurs among firms at the same
level of the channel (e.g., retailer to retailer).level of the channel (e.g., retailer to retailer).
– Vertical ConflictVertical Conflict occurs between different levels ofoccurs between different levels of
the same channel (e.g., wholesaler to retailer).the same channel (e.g., wholesaler to retailer).
• Some conflict can be healthy competition.Some conflict can be healthy competition.
6. 10-6
Channel Conflict
When it decided to sell its familiar containers at retail through Target stores,
Tupperware avoided conflicts with its army of in-home sales consultants by inviting
them into the stores to demonstrate the products.
8. 10-8
Corporate VMS
Common Ownership at Different
Levels of the Channel (e.g., Sears)
Contractual VMS
Contractual Agreements Among
Channel Members (e.g., ACE Hardware)
Administered VMS
Leadership is Assumed by One or
a Few Dominant Members (e.g., Kraft)
Types of Vertical Marketing Systems
Control
High
Low
9. 10-9
Innovations in Marketing Systems
Two or moreTwo or more
companies at onecompanies at one
channel level joinchannel level join
together to follow atogether to follow a
new marketingnew marketing
opportunity.opportunity.
Example: Banks inExample: Banks in
grocery storesgrocery stores
Two or moreTwo or more
companies at onecompanies at one
channel level joinchannel level join
together to follow atogether to follow a
new marketingnew marketing
opportunity.opportunity.
Example: Banks inExample: Banks in
grocery storesgrocery stores
A single firm sets upA single firm sets up
two or more marketingtwo or more marketing
channels to reach onechannels to reach one
or more customeror more customer
segments.segments.
Example: RetailersExample: Retailers
and catalogsand catalogs
A single firm sets upA single firm sets up
two or more marketingtwo or more marketing
channels to reach onechannels to reach one
or more customeror more customer
segments.segments.
Example: RetailersExample: Retailers
and catalogsand catalogs
Horizontal Marketing
System
Horizontal Marketing
System
Hybrid MarketingHybrid Marketing
SystemSystem
Hybrid MarketingHybrid Marketing
SystemSystem
10. 10-10
Number of Intermediaries
• Intensive distributionIntensive distribution
• Exclusive distributionExclusive distribution
• Selective distributionSelective distribution
Editor's Notes
Page <number>
Chapter 1
1). Information: Gathering and distributing marketing research and intelligence information about actors and forces in the marketing environment needed for planning and aiding exchange.
2). Promotion:
3). Contact: with prospective buyers.
4). Matching—buyers with sellers.
5). Negotiation so ownership can take place.
6). Others include:
a). Physical distribution (such as transportation and storage).
b). Financing.
c). Risk taking.
Note: The question is not whether these functions must be performed but rather who will perform them.
