1. 13
Marketing Channel
Professor Close

2. LO 1 Explain what a marketing channel is and why intermediaries
are needed
LO 2 Define the types of channel intermediaries and describe their
functions and activities
LO 3 Describe the channel structures for consumer and business
products and discuss alternative channel arrangements
LO 4 Discuss the issues that influence channel strategy
Learning Outcomes

3. LO 5 Describe the different channel relationship types and their
unique costs and benefits
LO 6 Explain channel leadership, conflict, and partnering
LO 7 Discuss channels and distribution decisions in global
markets
LO 8 Identify the special problems and opportunities associated
with distribution in service organizations
Learning Outcomes

4. Explain what a
marketing channel is
and why intermediaries
are needed
Marketing Channels

5. Marketing Channels
a set of interdependent organizations
that eases the transfer of ownership
as products move from producer to
business user or consumer.
A Marketing Channel is…

6. Marketing Channel Functions
Specialization and division of labor
Overcoming discrepancies
Providing contact efficiency
LO1

7. Specialization and
Division of Labor
Creates greater efficiency
Provides lower production costs
Achieves economies of scale
Aids producers who lack
resources to market directly
Builds good relationships with
customers

8. Overcoming Discrepancies
Discrepancy
of
Quantity
Discrepancy
of
Assortment
The difference between the
amount of product produced
and the amount an end user
wants to buy.
The lack of all the items a
customer needs to receive full
satisfaction from a product or
products.

9. Overcoming Discrepancies
Temporal
Discrepancy
Spatial
Discrepancy
A situation that occurs when a
product is produced but a
customer is not ready to buy it.
The difference between the
location of a producer and the
location of widely
scattered markets.

10. Exhibit 13.1
How Marketing Channels Reduce the
Number of Required Transactions

11. Define the types of
channel intermediaries
and describe their
functions and activities
Channel Intermediaries and
Their Functions

12. Channel Intermediaries
Retailer
A channel intermediary that
sells mainly to customers.
Merchant
Wholesaler
An institution that buys goods
from manufacturers, takes title
to goods, stores them,
and resells and ships them.
Agents and
Brokers
Wholesaling intermediaries who
facilitate the sale of a product by
representing channel members.

13. Channel Intermediaries
Retailers
Merchant
Wholesalers
Agents
and
Brokers
Take Title to Goods
Take Title to Goods
Do NOT Take Title to Goods
LO2

14. Factors Suggesting Type of
Wholesaling Intermediary to Use
Product characteristics
Buyer considerations
Market characteristics
LO2

15. Factors Suggesting Type of
Wholesaling Intermediary to Use
Factor Merchant
Wholesalers
Agents/ Brokers
Nature of product Standard Nonstandard,
custom
Complexity of product Simple Complex
Product’s gross margin High Low
Frequency of ordering Frequent Infrequent
Time between order and
receipt of shipment
Shorter lead
time
Longer lead
time
Number of buyers Many Few
Concentration of buyers Dispersed Concentrated

16. Channel Functions
Performed by Intermediaries
Contacting/Promotion
Negotiating
Risk Taking
Researching
Financing
Physically distributing
Storing
Sorting
Facilitating
Functions
Transactional
Functions
Logistical
Functions

17. Logistics
Logistics
The efficient and cost-
effective forward and
reverse flow and storage of
goods, services, and related
information, into through,
and out of channel member
companies.

18. Channel Intermediaries and
Functions
CHANNEL
INTERMEDIARIES
Retailers
Wholesalers
Agents and Brokers
CHANNEL
FUNCTIONS
Transactional
Logistical
Facilitating
Perform

19. Describe the channel
structures for
consumer and
business products
and discuss
alternative channel
arrangements
Channel Structures

20. LO3
Exhibit 13.3
Marketing Channels for Consumer
Products

21. Channels for Consumer
Products
Direct
Channel A distribution channel in
which producers sell
directly to consumers.
©APPhoto/MattSlocum

22. Exhibit 13.4
Channels for Business
and Industrial Products

23. Business-to-Business
Exchanges on the Internet
Companies drop the intermediary
from the supply chain
“Private exchanges” with select
suppliers automate the supply chain
The Internet has forced traditional
distributors to expand their model.

24. Alternative Channel
Arrangements
Multiple channels
Strategic channel alliances
Nontraditional channels

25. Discuss the issues
that influence
channel strategy
Making Channel
Strategy Decisions

26. Channel Strategy
Decisions
Factors
Affecting
Channel
Choice
Producer Factors
Product Factors
Market Factors
Exclusive Distribution
Selective Distribution
Intensive Distribution
Level of
Distribution
Intensity

27. Market Factors
Market
Factors
That Affect
Channel
Choices
Customer profiles
Consumer or Industrial
Customer
Size of market
Geographic location

28. Product Factors
Product
Factors
That Affect
Channel
Choices
Product Complexity
Product Standardization
Product Life Cycle
Product Delicacy
Product Price

29. Producer Factors
Producer
Factors
That Affect
Channel
Choices
Producer Resources
Number of Product Lines
Desire for Channel Control

30. Levels of Distribution
Intensity
Intensive
A form of distribution aimed at
having a product available in
every outlet
Selective
A form of distribution achieved
by screening dealers to eliminate
all but a few in any single area
Exclusive
A form of distribution that
established one or a few
dealers within a given area

31. Levels of
Distribution Intensity
Intensive
Achieve mass market
selling.
Convenience goods.
Many
Selective
Exclusive
Work with selected
intermediaries.
Shopping and some
specialty goods.
Work with single
intermediary. Specialty
goods and industrial
equipment.
Several
One
Intensity
Level
Objective
Number of
Intermediaries

32. Types of Channel Relationships
Describe the
different channel
relationship types
and their unique
costs and benefits

33. Benefits Hazards
Arm’s Length
Relationship
Fulfills a one time or
unique need; low
involvement/risk
Parties unable to
develop relationship;
low trust level
Cooperative
Relationship
Formal contract
without capital
investment/long-term
commitment; “happy
medium”
Some parties may
need more
relationship
definition
Integrated
Relationship
Closely bonded
relationship;
explicitly defined
relationships
High capital
investment; any
failure could affect
every channel
member
Types of Channel
Relationships

34. Explain channel
leadership, conflict,
and partnering
Managing Channel
Relationships

35. Social Dimensions of
Channels
Partnering
Conflict
Leadership
Control
Power

36. Channel Power, Control,
and Leadership
Channel
Power
A channel member’s capacity to control or
influence the behavior of other channel members
Channel
Control
A situation that occurs when one marketing
channel member intentionally affects another
member’s behavior
Channel
Leader
A member of a marketing channel that exercises
authority/power over the activities of other members

37. Channel Conflict
Channel
Conflict
A clash of goals and methods
between distribution channel
members

38. Channel Conflict
Conflicts may occur if channel members:
 Have conflicting goals
 Fail to fulfill expectations of other channel
members
 Have ideological differences
 Have different perceptions of reality

39. Channel Partnering
By COOPERATING, channel members can
speed up inventory replenishment, improve
customer service, and reduce the total costs of
the marketing channel.
the joint effort of all channel members to
create a channel that serves
customers and creates a competitive
advantage.
Channel Partnering (Channel
Cooperation) is…

40. Discuss channels
and
distribution decisions
in global markets
Channels and Distribution
Decisions for Global Markets

41. Channels and Distribution
Decisions for Global Markets
Global Channel
Development
Channel structure
and type differ
Gray marketing channels
Distribute directly or through foreign partners

42. Identify the special
problems and
opportunities associated
with distribution in
service organizations
Channels and Distribution
Decisions for Services

43. Distribution in Service
Organizations

44. BeyondtheBook Chapter 13 Videos
Sephora – Marketing Channels
Discuss Sephora’s marketing channel for
consumer products.
http://www.cengage.com/marketing/boo
k_content/1439039429_lamb/company_c
lips/ch13.html