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Transcript of Place and Development of Channel Systems · PDF file1. Understand what product classes suggest...
![Page 1: Place and Development of Channel Systems · PDF file1. Understand what product classes suggest about Place objectives. 2. Understand why some firms use direct channel systems while](https://reader031.fdocuments.in/reader031/viewer/2022022003/5a9e17a57f8b9adb388e44a8/html5/thumbnails/1.jpg)
For use only with
Perreault/Cannon/
McCarthy texts, © 2010
McGraw-Hill
Companies, Inc.
McGraw-Hill/Irwin
Chapter 10
Place and Development of Channel Systems
www.mhhe.com/fourps
![Page 2: Place and Development of Channel Systems · PDF file1. Understand what product classes suggest about Place objectives. 2. Understand why some firms use direct channel systems while](https://reader031.fdocuments.in/reader031/viewer/2022022003/5a9e17a57f8b9adb388e44a8/html5/thumbnails/2.jpg)
1. Understand what product classes suggest about Place objectives.
2. Understand why some firms use direct channel systems while others work with intermediaries and indirect systems.
3. Understand how and why marketing specialists develop to make channel systems more effective.
4. Understand how to develop cooperative relationships and avoid conflict in channel systems.
5. Know how channel members in vertical marketing systems shift and share functions to meet customer needs.
At the end of this presentation, you should be
able to:
![Page 3: Place and Development of Channel Systems · PDF file1. Understand what product classes suggest about Place objectives. 2. Understand why some firms use direct channel systems while](https://reader031.fdocuments.in/reader031/viewer/2022022003/5a9e17a57f8b9adb388e44a8/html5/thumbnails/3.jpg)
6. Understand the differences between intensive, selective, and exclusive distribution.
7. Know the main approaches firms use to reach customers in international markets.
At the end of this presentation, you should be
able to:
![Page 4: Place and Development of Channel Systems · PDF file1. Understand what product classes suggest about Place objectives. 2. Understand why some firms use direct channel systems while](https://reader031.fdocuments.in/reader031/viewer/2022022003/5a9e17a57f8b9adb388e44a8/html5/thumbnails/4.jpg)
Place Decisions for Marketing Strategy
Planning
![Page 5: Place and Development of Channel Systems · PDF file1. Understand what product classes suggest about Place objectives. 2. Understand why some firms use direct channel systems while](https://reader031.fdocuments.in/reader031/viewer/2022022003/5a9e17a57f8b9adb388e44a8/html5/thumbnails/5.jpg)
CH 12: Retailers,
Wholesalers & Their
Strategy Planning
Place
objectives
Direct vs.
indirect
Channel
specialists
Channel
relationships
CH 11: Distribution
Customer Service &
Logistics
CH 10: Place and
Development of
Channel Systems
Market
exposure
Marketing Strategy Planning for Place (Exhibit 10-1)
![Page 6: Place and Development of Channel Systems · PDF file1. Understand what product classes suggest about Place objectives. 2. Understand why some firms use direct channel systems while](https://reader031.fdocuments.in/reader031/viewer/2022022003/5a9e17a57f8b9adb388e44a8/html5/thumbnails/6.jpg)
© 2010 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Key Elements of Distribution Strategy
![Page 7: Place and Development of Channel Systems · PDF file1. Understand what product classes suggest about Place objectives. 2. Understand why some firms use direct channel systems while](https://reader031.fdocuments.in/reader031/viewer/2022022003/5a9e17a57f8b9adb388e44a8/html5/thumbnails/7.jpg)
Key
Issues
Product
Classes
Suggest
Objectives
Place
System
Is Not
Automatic
Decisions
Have
Long-run Effects
Place Decisions Are Guided by “Ideal” Place
Objectives
![Page 8: Place and Development of Channel Systems · PDF file1. Understand what product classes suggest about Place objectives. 2. Understand why some firms use direct channel systems while](https://reader031.fdocuments.in/reader031/viewer/2022022003/5a9e17a57f8b9adb388e44a8/html5/thumbnails/8.jpg)
Internet Makes Direct
Distribution Easier
Greater Control
Lower Cost
Direct Contact with
Customer Needs
Quicker Response or
Change in Marketing Mix
Suitable Intermediaries
Not Available
Some
Reasons
For Choosing
Direct Channels
Channel System May Be Direct or Indirect
![Page 9: Place and Development of Channel Systems · PDF file1. Understand what product classes suggest about Place objectives. 2. Understand why some firms use direct channel systems while](https://reader031.fdocuments.in/reader031/viewer/2022022003/5a9e17a57f8b9adb388e44a8/html5/thumbnails/9.jpg)
Direct Channels
Are Common
with Business
Customers and
Services
![Page 10: Place and Development of Channel Systems · PDF file1. Understand what product classes suggest about Place objectives. 2. Understand why some firms use direct channel systems while](https://reader031.fdocuments.in/reader031/viewer/2022022003/5a9e17a57f8b9adb388e44a8/html5/thumbnails/10.jpg)
When Indirect
Channels Are
Best
![Page 11: Place and Development of Channel Systems · PDF file1. Understand what product classes suggest about Place objectives. 2. Understand why some firms use direct channel systems while](https://reader031.fdocuments.in/reader031/viewer/2022022003/5a9e17a57f8b9adb388e44a8/html5/thumbnails/11.jpg)
Andrea’s Kitchen is a catering business that operates by
means of its own website. Customers order party platters,
pastries, and other foods that the company makes to order.
The items are then vacuum-packed in dry ice and shipped
to the customer’s address via overnight delivery. Andrea’s
Kitchen is part of a(n):
A. indirect channel.
B. dual channel.
C. intermediary channel.
D. direct channel.
E. traditional channel.
Checking Your Knowledge
![Page 12: Place and Development of Channel Systems · PDF file1. Understand what product classes suggest about Place objectives. 2. Understand why some firms use direct channel systems while](https://reader031.fdocuments.in/reader031/viewer/2022022003/5a9e17a57f8b9adb388e44a8/html5/thumbnails/12.jpg)
The UK’s leading
supermarket chain
wanted to provide
the freshest food
possible in the most
environmentally
friendly way. Who
did Tesco turn to for
help?
Channel
Specialists May
Reduce
Discrepancies
and Separations
![Page 13: Place and Development of Channel Systems · PDF file1. Understand what product classes suggest about Place objectives. 2. Understand why some firms use direct channel systems while](https://reader031.fdocuments.in/reader031/viewer/2022022003/5a9e17a57f8b9adb388e44a8/html5/thumbnails/13.jpg)
A Discrepancy
of Assortment
![Page 14: Place and Development of Channel Systems · PDF file1. Understand what product classes suggest about Place objectives. 2. Understand why some firms use direct channel systems while](https://reader031.fdocuments.in/reader031/viewer/2022022003/5a9e17a57f8b9adb388e44a8/html5/thumbnails/14.jpg)
Sorting
Bulk-Breaking Accumulating
Assorting
Channel Specialists Adjust Discrepancies with
Regrouping Activities
![Page 15: Place and Development of Channel Systems · PDF file1. Understand what product classes suggest about Place objectives. 2. Understand why some firms use direct channel systems while](https://reader031.fdocuments.in/reader031/viewer/2022022003/5a9e17a57f8b9adb388e44a8/html5/thumbnails/15.jpg)
Interactive Exercise: Channel Efficiency
![Page 16: Place and Development of Channel Systems · PDF file1. Understand what product classes suggest about Place objectives. 2. Understand why some firms use direct channel systems while](https://reader031.fdocuments.in/reader031/viewer/2022022003/5a9e17a57f8b9adb388e44a8/html5/thumbnails/16.jpg)
Role of Channel Captain
Conflict Handling
Whole-Channel Product-
Market Commitment
Choosing the Type of
Relationship
Key
Issues In
Channel
Management
Channel Relationship Must Be Managed
![Page 17: Place and Development of Channel Systems · PDF file1. Understand what product classes suggest about Place objectives. 2. Understand why some firms use direct channel systems while](https://reader031.fdocuments.in/reader031/viewer/2022022003/5a9e17a57f8b9adb388e44a8/html5/thumbnails/17.jpg)
Producers or Intermediaries May Be Channel
Captains (Exhibit 10-2)
![Page 18: Place and Development of Channel Systems · PDF file1. Understand what product classes suggest about Place objectives. 2. Understand why some firms use direct channel systems while](https://reader031.fdocuments.in/reader031/viewer/2022022003/5a9e17a57f8b9adb388e44a8/html5/thumbnails/18.jpg)
Fairly good to good
Contracts
McDonald’s
Complete
One company
ownership
Florsheim
Some to good
Economic power and leadership
General Electric
Characteristics
Type of channel
Little or none
None
Typical “inde-
pendents”
Amount of cooperation
Traditional Vertical marketing systems
Administered Contractual Corporate
Control maintained by
Examples
Vertical Marketing Systems Focus on Final
Customers
![Page 19: Place and Development of Channel Systems · PDF file1. Understand what product classes suggest about Place objectives. 2. Understand why some firms use direct channel systems while](https://reader031.fdocuments.in/reader031/viewer/2022022003/5a9e17a57f8b9adb388e44a8/html5/thumbnails/19.jpg)
© 2010 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Channel Relationships
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Dave Tindall runs “Maid to Perfection,” a residential and
business cleaning service. He paid a fee to be part of the
“Maid to Perfection” system of local operators. The written
agreement gives him the right to use the company name
and operations manual, and the agreement promises Dave
that there will not be another “Maid to Perfection” operator
in his immediate area. He operates as a semi-independent
entrepreneur, but is still part of a national organization.
Dave is part of a(n): A. traditional channel. B. contractual channel. C. corporate channel. D. administered channel. E. dual channel.
Checking Your Knowledge
![Page 21: Place and Development of Channel Systems · PDF file1. Understand what product classes suggest about Place objectives. 2. Understand why some firms use direct channel systems while](https://reader031.fdocuments.in/reader031/viewer/2022022003/5a9e17a57f8b9adb388e44a8/html5/thumbnails/21.jpg)
Intensive
Selective
= number of outlets Exclusive
Market
Exposure
Strategies
The Best Channel System Should Achieve
Ideal Market Exposure
![Page 22: Place and Development of Channel Systems · PDF file1. Understand what product classes suggest about Place objectives. 2. Understand why some firms use direct channel systems while](https://reader031.fdocuments.in/reader031/viewer/2022022003/5a9e17a57f8b9adb388e44a8/html5/thumbnails/22.jpg)
© 2010 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Intensive Distribution
![Page 23: Place and Development of Channel Systems · PDF file1. Understand what product classes suggest about Place objectives. 2. Understand why some firms use direct channel systems while](https://reader031.fdocuments.in/reader031/viewer/2022022003/5a9e17a57f8b9adb388e44a8/html5/thumbnails/23.jpg)
Interactive Exercise: Ideal Market Exposure
![Page 24: Place and Development of Channel Systems · PDF file1. Understand what product classes suggest about Place objectives. 2. Understand why some firms use direct channel systems while](https://reader031.fdocuments.in/reader031/viewer/2022022003/5a9e17a57f8b9adb388e44a8/html5/thumbnails/24.jpg)
Chocolate Dreams is a manufacturer of expensive, high-
quality, hand-made “old style” candies that are sold through
fine department stores and certain bookstores and fine gift
shops. The ideal market exposure for products
manufactured by Chocolate Dreams is:
A. intensive.
B. comprehensive.
C. exclusive.
D. extensive.
E. selective.
Checking Your Knowledge
![Page 25: Place and Development of Channel Systems · PDF file1. Understand what product classes suggest about Place objectives. 2. Understand why some firms use direct channel systems while](https://reader031.fdocuments.in/reader031/viewer/2022022003/5a9e17a57f8b9adb388e44a8/html5/thumbnails/25.jpg)
Retailer Retailer Retailer
Horizontal Arrangements
Are Illegal
Retailer Retailer
Producer
Vertical
Arrangements
May Be Legal Wholesaler
Limiting Market Exposure
![Page 26: Place and Development of Channel Systems · PDF file1. Understand what product classes suggest about Place objectives. 2. Understand why some firms use direct channel systems while](https://reader031.fdocuments.in/reader031/viewer/2022022003/5a9e17a57f8b9adb388e44a8/html5/thumbnails/26.jpg)
Channel Systems Can Be Complex (Exhibit 10-4)
![Page 27: Place and Development of Channel Systems · PDF file1. Understand what product classes suggest about Place objectives. 2. Understand why some firms use direct channel systems while](https://reader031.fdocuments.in/reader031/viewer/2022022003/5a9e17a57f8b9adb388e44a8/html5/thumbnails/27.jpg)
Entering International Markets (Exhibit 10-5)
Exporting Licensing Management
Contracting
Joint
Venture
Direct
Investment
Generally increasing investment, risk, and control of marketing
![Page 28: Place and Development of Channel Systems · PDF file1. Understand what product classes suggest about Place objectives. 2. Understand why some firms use direct channel systems while](https://reader031.fdocuments.in/reader031/viewer/2022022003/5a9e17a57f8b9adb388e44a8/html5/thumbnails/28.jpg)
1. Understand what product classes suggest about Place objectives.
2. Understand why some firms use direct channel systems while others work with intermediaries and indirect systems.
3. Understand how and why marketing specialists develop to make channel systems more effective.
4. Understand how to develop cooperative relationships and avoid conflict in channel systems.
5. Know how channel members in vertical marketing systems shift and share functions to meet customer needs.
You should now be able to:
![Page 29: Place and Development of Channel Systems · PDF file1. Understand what product classes suggest about Place objectives. 2. Understand why some firms use direct channel systems while](https://reader031.fdocuments.in/reader031/viewer/2022022003/5a9e17a57f8b9adb388e44a8/html5/thumbnails/29.jpg)
6. Understand the differences between intensive, selective, and exclusive distribution.
7. Know the main approaches firms use to reach customers in international markets.
You should now be able to:
![Page 30: Place and Development of Channel Systems · PDF file1. Understand what product classes suggest about Place objectives. 2. Understand why some firms use direct channel systems while](https://reader031.fdocuments.in/reader031/viewer/2022022003/5a9e17a57f8b9adb388e44a8/html5/thumbnails/30.jpg)
• Place
• Channel of
distribution
• Direct marketing
• Discrepancy of
quantity
• Discrepancy of
assortment
• Regrouping
activities
• Accumulating
• Bulk-breaking
• Sorting
• Assorting
• Traditional channel systems
• Channel captain
• Vertical marketing systems
• Corporate channel systems
• Vertical integration
• Administered channel systems
• Contractual channel systems
Key Terms
![Page 31: Place and Development of Channel Systems · PDF file1. Understand what product classes suggest about Place objectives. 2. Understand why some firms use direct channel systems while](https://reader031.fdocuments.in/reader031/viewer/2022022003/5a9e17a57f8b9adb388e44a8/html5/thumbnails/31.jpg)
• Ideal market exposure
• Intensive distribution
• Selective
distribution
• Exclusive
distribution
• Multichannel
distribution
• Reverse channels
Key Terms
• Exporting
• Licensing
• Management contracting
• Joint venture
• Direct investment