Material in slides 2-14 of this overview adapted from Principles of Marketing. (2015). University of Minnesota Libraries Press. https://open.lib.umn.edu/principlesmarketing/ Using Marketing Channels & Price to Create Value for Customers Where the offering is and how it is priced communicates value to the customer 6.1 Marketing channels and channel partners 6.2 Typical marketing channels 6.3 Functions performed by channel partners 6.4 Marketing channel strategies 6.5 Channel dynamics 6.6 Demand planning and inventory control 6.7 Warehousing and transportation 6.8 The pricing framework and a firm’s pricing objectives 6.9 Factors that affect pricing decisions Marketing channels and channel partners Goal = get a product to the customer when, where and how the customer wants it. Requires cooperating channel partners (or intermediaries) that actively promote and sell the product as it travels through the channels to the end customer. Typical marketing channels • Two major types of channel systems • Direct channel— from producer to consumer with no intermediaries (farmer’s market, internet if direct from the manufacturer) • Indirect channel — Any number of intermediaries between producer and consumer • Many products have multiple channels Question: Wouldn’t fewer intermediaries be more efficient and effective to get products to consumer when, where and how they want them? Answer: Some large retailers have been able to own more of the channels themselves (disintermediation). But, the channel member functions have to be performed by some firm, but one firm can perform more than one channel functions. Only include channel members that add value for the customer. Functions performed by channel partners • Disseminating marketing communications and promote brands • Push versus pull strategy • Sorting and regrouping products • Storing and managing inventory • Distributing products • Assume ownership risk and extend credit • Share marketing and other information Marketing channel strategies Factors affecting the marketing channel strategy decisions • Type of customer • Type of product • Channel partner capabilities • Business environment and technology Channel integration • Vertical marketing system — formal agreements to cooperate • Conventional marketing system — no formal relationships, all independent operators • Horizontal marketing system — Two companies at same channel level agree to cooperate (usually for compatible but non competing products) Channels versus supply chains — supply chains are channels that includes the firms involved in distributing the raw materials for manufacturing. Value chain — another term for supply chain BUT acknowledges the value adding role of the intermediary. Factors that affect a product’s intensity of distribution • intensive distribution = want to sell product in as many outlets as possible • selective distribution = s ...

1. Material in slides 2-14 of this overview adapted from Principles
of Marketing. (2015). University of Minnesota Libraries Press.
https://open.lib.umn.edu/principlesmarketing/
Using Marketing Channels & Price to Create
Value for Customers
Where the offering is and how it is priced communicates value
to the
customer
6.1 Marketing channels and channel partners
6.2 Typical marketing channels
6.3 Functions performed by channel partners
6.4 Marketing channel strategies
6.5 Channel dynamics
6.6 Demand planning and inventory control
6.7 Warehousing and transportation
6.8 The pricing framework and a firm’s pricing objectives

2. 6.9 Factors that affect pricing decisions
Marketing channels and channel partners
Goal = get a product to the customer when, where and
how the customer wants it.
Requires cooperating channel partners (or intermediaries)
that actively promote and sell the product as it travels
through the channels to the end customer.
Typical marketing channels
• Two major types of channel systems
• Direct channel— from producer
to consumer with no
intermediaries (farmer’s market,
internet if direct from the
manufacturer)
• Indirect channel — Any number
of intermediaries between
producer and consumer
• Many products have multiple
channels
Question: Wouldn’t fewer intermediaries be more
efficient and effective to get products to consumer when,

3. where and how they want them?
Answer: Some large retailers have been able to own more
of the channels themselves (disintermediation).
But, the channel member functions have to be performed
by some firm, but one firm can perform more than one
channel functions.
Only include channel members that add value for the
customer.
Functions performed by channel partners
• Disseminating marketing communications and promote brands
• Push versus pull strategy
• Sorting and regrouping products
• Storing and managing inventory
• Distributing products
• Assume ownership risk and extend credit
• Share marketing and other information
Marketing channel strategies
Factors affecting the marketing channel strategy
decisions

4. • Type of customer
• Type of product
• Channel partner capabilities
• Business environment and technology
Channel integration
• Vertical marketing system — formal agreements to cooperate
• Conventional marketing system — no formal relationships, all
independent operators
• Horizontal marketing system — Two companies at same
channel level
agree to cooperate (usually for compatible but non competing
products)
Channels versus supply chains — supply chains are channels
that includes
the firms involved in distributing the raw materials for
manufacturing.
Value chain — another term for supply chain BUT
acknowledges the value
adding role of the intermediary.
Factors that affect a product’s intensity of distribution
• intensive distribution = want to sell product in as

5. many outlets as possible
• selective distribution = selling products at select
outlets in specific locations.
• exclusive distribution = selling products through one
or very few outlets
Demand planning and inventory control
• Demand planning — process of estimating how much
product customers will buy from you so can plan
production capacity to not run out
• Inventory control — process of ensuring have adequate
supply of products on hand and in sufficient assortment
to meet customer needs
• Product tracking — process to knowing where
inventory is at all times
Warehousing & transportation
• Warehousing — handles fluctuations in demand
• Distribution centers — a warehouse that focuses on
moving product to various wholesalers, retailers or
consumers
• Transportation — the logistics of moving goods via air,
boat, rail, pipeline, plane or truck

6. Pricing framework and a firm’s pricing objectives
A framework for how to set prices
Factors that affect pricing decisions
• How will customers perceive the price?
• How does it compare to competitors?
• Are there any external factors such as the economy,
government laws or regulations that impact the price?
• How much does it cost to create the offering?
Pricing strategies
Introductory pricing
strategies
• skimming
• penetration
• everyday low price
Sample pricing approaches
cost plus
markup

7. markdown
odd/even pricing
prestige pricing
leader pricing
sealed bid pricing
online auction
going rate price
price bundling
captive pricing
product mix pricing
two-part pricing
payment pricing
promotional pricing
price discrimination
Questions?
Be sure to take advantage of the Ask the Professor
Discussion to ask any questions, get clarifications, or
otherwise seek the advice and assistance of your
faculty member.
Running head: Consumer Behavior, Market Segmentation &
Positioning

8. 1
Running head: Consumer Behavior, Market Segmentation &
Positioning
2

9. Consumer Behavior, Market Segmentation & Positioning
Consumer decision-making process.
Chipotle focused on sustainability, great taste, great value,
great nutrition, and support for
families because that is one of their main considerations in
coming up with the product. Their
product strategy is unique compared to the other fast-food chain
restaurants. It has an Integrity
program that aims to remove any genetically modified organism
food from the menu.
The company has a cost-effective mechanism for advertising
products. Clients finish and
customize the food orders from their mobile phones, making it
possible for them to maximize
their time and prepare meals before the clients get to the
restaurant. Their website has many
resources that attract the millennials that appeal. For instance,
Chipotle describes the source and
process of food reception or preparation with all the
ingredients. That enhances an understanding
of what is being consumed by the customers and the source or
condition of the ingredients. They
blanch the onions, lemons, avocados, jalapenos, and limes in

10. boiling water for five seconds to
eliminate any skin germs (Chipotle Mexican Grill, 2015). The
company's website has a nutrition
calculator that promptly computes calories, the quantity of
sugars, salt … for clients.
Furthermore, they considered most families' eating out habits as
seeking convenience and
quality. Therefore, close analysis of the consumers and their
decision shows that they recognized
the problem of wanting fast food, yet most were unhealthy and
lacking freshness. To satisfy that
Running head: Consumer Behavior, Market Segmentation &
Positioning
3
demand Chipotle acquires ingredients from farm producers who
have humane treatment towards
their animals. By attracting customers seeking fast food with
fresh and healthy ingredients, this
very same customers started being advocates of what the
company was offering. They helped the

11. company build authority by giving positive reviews and even
becoming partners.
Market Segmentation.
Market segmentation serves significantly in the organization
and clarifies the desires and
needs of particular people in a target market. Commercial
enterprises utilize market
segmentation to enhance the assessment of markets and ensure a
company realizes its goals.
According to Friedman (2011), market segmentation is where a
market is separated into
primarily homogeneous groupings for the clients to comprehend
their needs (Friedman, 2011).
That allows for understanding the target markets as particulars
with mutual interests, priorities,
and needs that enhance the clients' understanding. For instance,
once the focus is on a given
segment of people related to income, tastes, gender, or age, a
potential business might have a
greater understanding of the products they need to focus on and
make it affordable for the
clients.
The implementation of market segmentation demands that an
organization ought, to

12. begin with, the identification of what features a target market
is. There are various market
segment features, including behavioural, demographic,
geographic, and psychographic aspects.
For instance, in the demographic segmentation, there is
ethnicity, age, education, income, gender
and occupation whereas psychographic segmentation focuses on
the values, opinions, interests,
attitudes, and activities of the customers (New Charter
University, 2016). As soon as the greatest
aspect of the product which is segmentation is determined
through the features of the target
Running head: Consumer Behavior, Market Segmentation &
Positioning
4
market promotion and sales process. It is quite costly to
advertise products because that makes it
possible to reach the target markets.
Businesses integrate segmentation features that relate with
their products thus establishing the

13. place, way, and advertisement. Companies which go for all the
population and not particular
people hardly thrive.
In the fast-food business, there is a great dependence on the
basic principles of
segmentation that build restaurants' success in easy access in
the target market. For instance,
Chipotle Mexican Grill is a fast-food restaurant that meets the
needs of particular generations
who are the "Millennials". In America, the Millennials add up to
25% of the United States
population and that 50% of such population are more than ready
to buy from a firm which
supports a they believe in (Millennials, 2016). Based on another
research by The Nielsen
Company (2016), about 66% Millennials ready to buy products
from a firm that support positive
environmental and social and impacts.
Market segmentation for Chipotle in the US market is
millennials or individuals born between
1976 and 2000, especially those with the average annual income
of $ 54000. The 1600
restaurants increase convenience for all the customers by

14. ensuring they acquire what they need
within their neighbourhood. The primary target market are the
locals. Known for fresh and
healthy alternatives, Chipotle appeals to that target age group in
the society. The consciousness
to human attracts commuting workers, tourists, and people
attending commercial events. The
product is associated with a fast-casual tag that is the
exponentially growing market segment on
the restaurant industry.
Running head: Consumer Behavior, Market Segmentation &
Positioning
5
Target Market & Strategy.
The retention of customers is easier than establishing new ones.
Failure to define a market can
also be quite disastrous. Market segmentation allows an
organization to classify the population

15. base on given features. That helps to establish the ideal clients
and match the business plans and
advertisement to reach these potential clients and their needs.
There is a need for an accessible,
durable, identifiable, unique, and substantial customer aspect to
create a successful company
(NetMBA, 2010). Market segmentation could finally result in
direct communication between the
target market and a company. For instance, the clients could
give feedback that would permit the
organization to have a direct evaluation of how to meet the
clients' needs and desires.
Organizations can consistently change to the best and offer
needed services. Nonetheless, the
organizations that fail to determine their target market will have
difficulty determining how they
might expand and have suitable services for their clients.
I think the urban savvy young and middle age shoppers are
suitable in the fast-food market.
Given that many people hardly have time to cook in urban areas,
they also consider healthy food
and find convenience in pre-cooked and ready to order foods.
They often go out for lunch and
dinner with their friends, colleagues or family.

16. Positioning.
High Price
High Quality
Low Quality
Low Price
Baja Fresh
Moe’s Mexican Grill
Taco Bell
Rubios
Qdoba
Chipotle
Running head: Consumer Behavior, Market Segmentation &
Positioning
6

17. For the perceptual map of Chipotle, I picked two criteria – food
Price and Quality. Chipotle does
not have a monopoly and faces growing competition in the fast-
casual Mexican food like Qdoba,
Moe's and Baja Fresh. Looking at the map Chipotle at the
moment is well-positioned as it offers
food prices slightly lower than its direct competitor but of
higher quality. To remain competitive,
Chipotle might need to reconsider its current structure. As of
now, Chipotle owns all of its
restaurants, but franchising might be something to consider in
the future.
References
Consumer Behavior: How people make buying decisions.
(2015). Principles of Marketing.
University of Minnesota Libraries
https://open.lib.umn.edu/principlesmarketing/part/chapter -3-
consumer-behavior-how-
people-make-buying-decisions/
Chipotle Mexican Grill. (2015). A Focus on Food Safety.
Retrieved from

18. https://www.chipotle.com/foodsafety
Czaplewski, A., Olson, E., & McNulty, P., (2016). Going Green
Puts Chipotle in the Black.
American Marketing Association. Retrieved from
https://www.ama.org/publications/MarketingNews/Pages/Going-
Green--Puts-
Running head: Consumer Behavior, Market Segmentation &
Positioning
7
Chipotle- in-the-Black.aspx
Friedman, H., (2011). Market Segmentation and Targeting.
Brooklyn College of the City
University of New York. Retrieved from
http://academic.brooklyn.cuny.edu/economic/friedman/ mmmark
etsegmentation.ht
m

19. Market segmenting, targeting, and positioning. (2015).
Principles of Marketing. University of
Minnesota Libraries
https://open.lib.umn.edu/principlesmarketing/part/chapter -5-
market-
segmenting-targeting-and-positioning/
Millennial Marketing, (2016). Who Are Millennials? Retrieved
from
http://www.millennialmarketing.com/who-are-millennials/
NetMBA. (2010). Market Segmentation. Retrieved from
http://www.netmba.com/marketing/market/segmentation/
Norman, D., (2016). Market Segmentation, Targeting and
Positioning and the Product. New
Charter University. Retrieved from
https://new.edu/nodes/market-segmentation-targeting-and-
positioning-and-the-product
https://open.lib.umn.edu/principlesmarketing/part/chap ter-5-

20. market-segmenting-targeting-and-positioning/
https://open.lib.umn.edu/principlesmarketing/part/chapter -5-
market-segmenting-targeting-and-positioning/