LHM 12e ch13_PPT_IE

8/13/2019 LHM 12e ch13_PPT_IE

1/52

Chapter 13: Marketing Channels

Prepared and Designed by Laura Rush, B-books Ltd.

1Copyright Cengage Learning 2013All Rights Reserved

8/13/2019 LHM 12e ch13_PPT_IE

2/52

Learning Outcomes

LO1

LO2

LO3

Explain what a marketing channel is and whyintermediaries are needed

Define the types of channel intermediaries

and describe their functions and activities

Describe the channel structures for

consumer and business products and

discuss alternative channel arrangements

Discuss the issues that influence channel

strategyLO4


8/13/2019 LHM 12e ch13_PPT_IE

3/52

Learning Outcomes

Describe the different channel relationship

types and their unique costs and benefits

Explain channel leadership, conflict, and

partnering

Discuss channels and distribution

decisions in global markets

Identify the special problems andopportunities associated with distribution

in service organizations

LO5

LO6

LO8

LO7


8/13/2019 LHM 12e ch13_PPT_IE

4/52

Marketing Channels

Explain what a marketingchannel is and why

intermediaries are needed.

LO14Copyright Cengage Learning 2013All Rights Reserved

8/13/2019 LHM 12e ch13_PPT_IE

5/52

Marketing Channels

A set ofinterdependent organizations

that ease the transfer ofownership as products move

from producer to businessuser or consumer.


8/13/2019 LHM 12e ch13_PPT_IE

6/52

Marketing Channel Functions

Specialization and division of labor

Overcoming discrepancies

Providing contact efficiency


8/13/2019 LHM 12e ch13_PPT_IE

7/52

Specialization and Division of Labor

Creates greater efficiency

Provides lower costs

Achieves economies of scale

Aids producers who lack resources

to market directly

Builds good relationships withcustomers


8/13/2019 LHM 12e ch13_PPT_IE

8/52

8/13/2019 LHM 12e ch13_PPT_IE

9/52

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.


8/13/2019 LHM 12e ch13_PPT_IE

10/52

Providing Contact Efficiency

10Copyright Cengage Learning 2013 All Rights Reserved

8/13/2019 LHM 12e ch13_PPT_IE

11/52

Review Learning Outcome

Marketing Channels

LO1

Providing Specialization

and Division of Labor

Overcoming

Discrepancies

Providing Contact

Efficiency

MarketingChannel

Supply

Chain

11Copyright Cengage Learning 2013

All Rights Reserved

8/13/2019 LHM 12e ch13_PPT_IE

12/52

Channel Intermediaries

Define the types of channelintermediaries and describetheir functions and activities.

LO2


All Rights Reserved

8/13/2019 LHM 12e ch13_PPT_IE

13/52


RetailerA channel intermediary that

sells mainly to customers.

Merchant

Wholesaler

An institution that buys goodsfrom manufacturers, takes titleto goods, stores them,

and resells and ships them.

Agents and

Brokers

Wholesaling intermediaries whofacilitate the sale of a product from

producer to end user by representingretailers, wholesalers, or

manufacturers.


8/13/2019 LHM 12e ch13_PPT_IE

14/52


Retailers

MerchantWholesalers

AgentsandBrokers

Take Title to Goods

Take Title to Goods

Do NOT Take Title to Goods


8/13/2019 LHM 12e ch13_PPT_IE

15/52

Factors Suggesting Type of

Wholesaling Intermediary to Use

Product characteristics

Buyer considerations

Market characteristics


8/13/2019 LHM 12e ch13_PPT_IE

16/52

Channel Functions Performed

by Intermediaries

Contacting/Promotion

Negotiating

Risk Taking

Researching

Financing

Physically distributing

Storing

Sorting

FacilitatingFunctions

TransactionalFunctions

LogisticalFunctions


8/13/2019 LHM 12e ch13_PPT_IE

17/52

Logistics

The efficient and cost-effective

forward and reverse flow as

well as storage of goods, services, and

related information, into, through, and

out of channel member companies.


O

8/13/2019 LHM 12e ch13_PPT_IE

18/52

Review Learning OutcomeChannel Intermediaries and Functions

LO2

CHANNELINTERMEDIARIES

Retailers

Wholesalers

Agents and Brokers

CHANNELFUNCTIONS

Transactional

Logistical

Facilitating

Perform


All Rights Reserved

8/13/2019 LHM 12e ch13_PPT_IE

19/52

Channel Structures

Describe the channelstructures for consumerand business productsand discuss alternativechannel arrangements.

LO3


All Rights Reserved

8/13/2019 LHM 12e ch13_PPT_IE

20/52

Channels for Consumer Products

Direct Channel - A distributionchannel in which producerssell directly to consumers.


8/13/2019 LHM 12e ch13_PPT_IE

21/52

Producer Producer Producer Producer

Consumers Consumers Consumers Consumers

Retailers Retailers Retailers

Wholesalers Wholesalers

Agents orBrokers

Wholesaler

Channel

Retailer

ChannelDirect

Channel

Agent/Broker

Channel

Channels for Consumer Products


All Rights Reserved

8/13/2019 LHM 12e ch13_PPT_IE

22/52

Channels for Business Products

Producer

IndustrialUser

Direct

Channel

Producer

Govt.Buyer

Direct

Channel

Producer Producer Producer

IndustrialUser

IndustrialUser

IndustrialUser

IndustrialDistributor IndustrialDistributor

Agents orBrokers

Agents orBrokers

Agent/Broker

Channel

Industr ial

Distr ibutorAgent/Broker

Industr ial

Channel


All Rights Reserved

8/13/2019 LHM 12e ch13_PPT_IE

23/52

Business Exchanges on the Internet

Agents link buyers and sellers

Companies drop the intermediary from

the supply chain

Private exchanges with select suppliers

automate the supply chain

Online

http://www.sherwinwilliams.com

http://www.sherwinwilliams.com/http://www.sherwinwilliams.com/

8/13/2019 LHM 12e ch13_PPT_IE

24/52

Alternative Channel Arrangements

Multiple channels

Strategic channel alliances

Nontraditional channels


8/13/2019 LHM 12e ch13_PPT_IE

25/52

Review Learning OutcomeChannel Structures

LO3

CONSUMERCHANNELS

Direct

Retail

Wholesaler

Agent/broker

BUSINESSCHANNELS

Direct

Industrial

Agent/broker

Agent/broker

industrial

ALTERNATIVECHANNELS

Multiple

Nontraditional

Strategic

alliances


All Rights Reserved

8/13/2019 LHM 12e ch13_PPT_IE

26/52

Making Channel Strategy Decisions

Discuss the issues that

influence channel strategy.

LO4


All Rights Reserved

8/13/2019 LHM 12e ch13_PPT_IE

27/52

Channel Strategy Decisions

FactorsAffectingChannelChoice

Producer Factors

Product Factors

Market Factors

Exclusive Distribution

Selective Distribution

Intensive Distribution

Level ofDistribution

Intensity


8/13/2019 LHM 12e ch13_PPT_IE

28/52

Market Factors

MarketFactorsThat AffectChannelChoices

Customer profiles

Consumer or Industrial

Customer

Size of market

Geographic location


8/13/2019 LHM 12e ch13_PPT_IE

29/52

Product Factors

ProductFactors

That AffectChannelChoices

Product Complexity

Product Standardization

Product Life Cycle

Product Delicacy

Product Price


8/13/2019 LHM 12e ch13_PPT_IE

30/52

Producer Factors

ProducerFactors

That AffectChannelChoices

Producer Resources

Number of Product Lines

Desire for Channel Control


8/13/2019 LHM 12e ch13_PPT_IE

31/52

Levels of Distribution Intensity

IntensiveA form of distribution aimed athaving a product available

in every outlet

SelectiveA form of distribution achievedby screening dealers to eliminate

all but a few in any single area

Exclusive

A form of distribution thatestablished one or a fewdealers within a given area


8/13/2019 LHM 12e ch13_PPT_IE

32/52

Levels of Distribution Intensity

IntensiveAchieve mass marketselling.Convenience goods.

Many

Selective

Exclusive

Work with selectedintermediaries.Shopping and somespecialty goods.

Work with singleintermediary. Specialtygoods and industrialequipment.

Several

One

Intensity

Level Objective

Number of

Intermediaries


R i L i O

8/13/2019 LHM 12e ch13_PPT_IE

33/52

Review Learning OutcomeIssues Influencing Channel Strategy

LO4

33

8/13/2019 LHM 12e ch13_PPT_IE

34/52

Types of Channel Relationships

Describe the different channelrelationship types and their

unique costs and benefits.

LO5

34

Copyright Cengage Learning 2013

All Rights Reserved

8/13/2019 LHM 12e ch13_PPT_IE

35/52

Types of Channel Relationships

Cooperative

Integrated

Arms Length


A L th d I t t d

8/13/2019 LHM 12e ch13_PPT_IE

36/52

Arms Length and Integrated

Relationships

Arms Length Relationship- A

relationship between companies

that is loose, characterized by

low Relational investment and

trust, and usually taking the form

of a series of discrete

transactions with no/lowexpectation of future interaction

or service.

Integrated Relationship- A relationship

between companies that is tightlyconnected, with linked processes across

and between firm boundaries, and

high levels of trust and inter-firm

commitment.


8/13/2019 LHM 12e ch13_PPT_IE

37/52

Cooperative Relationships

A relationship between companies

that takes the form of informal

partnership with moderate levels of

trust and information sharing as

needed to further each companys

goals.



8/13/2019 LHM 12e ch13_PPT_IE

40/52

Managing Channel Relationships

Partnering

Conflict

Leadership

Control

Power


8/13/2019 LHM 12e ch13_PPT_IE

41/52

Channel Power, Control, and Leadership

Channel

Power

The capacity of a particularmarketing channel member to

control or influence the behavior

of other channel members

Channel

Control

A situation that occurs whenone marketing channel member

intentionally affects another

members behavior

Channel

Leader

(channel captain)

A member of a marketingchannel that exercises

authority/power over the

activities of other members


Ch l C fli t d P t i

8/13/2019 LHM 12e ch13_PPT_IE

42/52

Channel Conflict and Partnering

Channel ConflictA clash of

goals and methods between

distribution channel members.

Channel Partnering (Channel Cooperation)

The joint effort of all channel

members to create a supply

chain that serves customers and

creates a competitive advantage.


All Rights Reserved

8/13/2019 LHM 12e ch13_PPT_IE

43/52

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


All Rights Reserved

8/13/2019 LHM 12e ch13_PPT_IE

44/52

Channel Partnering

Supplier /ManufacturerRelationships

Short-term

Adversarial

Independent

Price important

Long-term

Cooperative

Dependent

Value-added services

Number ofSuppliers

Many Few

Transaction-Based Partnership-Based

InformationSharing

Minimal High

InvestmentRequired

Minimal High


All Rights Reserved


8/13/2019 LHM 12e ch13_PPT_IE

45/52

Review Learning OutcomeChannel Leadership, Conflict, & Partnering

LO6

Channel

RelationshipSynergy

Channel Conflict

Horizontal Vertical

Channel Power,

Control, Leadership

Channel

Partnering


All Rights Reserved

8/13/2019 LHM 12e ch13_PPT_IE

46/52

Channels and Distribution Decisions

for Global Markets

Discuss channels and

distribution decisions

in global markets.

LO746Copyright Cengage Learning 2013

All Rights Reserved

8/13/2019 LHM 12e ch13_PPT_IE

48/52


LO7

Global Market Channel & Distribution Decisions

Distribute directly or through

foreign partners

Different channel structures than in

domestic markets

Illegitimate gray

marketing channels

Legal and infrastructure differences


All Rights Reserved

8/13/2019 LHM 12e ch13_PPT_IE

49/52


for Services

Identify the special problemsand opportunities

associated with distribution

in service organizations

LO8 49Copyright Cengage Learning 2013

All Rights Reserved

8/13/2019 LHM 12e ch13_PPT_IE

52/52

Chapter 13 Company Clip

The beauty-retail store, Sephora, has

become a leader in sales of health and

beauty-aid products. It uses a variety of

techniques to keep its shelves stocked andits customers happy.

http://www.cengage.com/marketing/book_content/9781111821647_lamb/videos/ch13.html

Copyright Cengage Learning 2013 52
http://www.cengage.com/marketing/book_content/9781111821647_lamb/videos/ch13.htmlhttp://www.cengage.com/marketing/book_content/9781111821647_lamb/videos/ch13.htmlhttp://www.cengage.com/marketing/book_content/9781111821647_lamb/videos/ch13.htmlhttp://www.cengage.com/marketing/book_content/9781111821647_lamb/videos/ch13.html

Documents

LHM 12e ch13_PPT_IE