What is a Marketing Channel?
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Dr. What is a Marketing Channel? • Marketing channel (a.k.a. distribution channel) - network of organizations that create time, place, and possession utilities for
description
What is a Marketing Channel?. Marketing channel (a.k.a. distribution channel) - network of organizations that create time, place, and possession utilities for consumers. Channel Structure. Three Dimensions. Length of channel. Intensity at various levels. Types of intermediaries. - PowerPoint PPT Presentation
Transcript of What is a Marketing Channel?
Dr.
What is a Marketing Channel?
• Marketing channel (a.k.a. distribution channel) - network of organizations that create time, place, and possession utilities for consumers
Dr.
Channel Structure
Length of channel
Intensity at various levels Types of intermediaries
Three Dimensions
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Channel Structure
Manufacturer Manufacturer Manufacturer Manufacturer
Consumer Consumer Consumer Consumer
Retailer Retailer Retailer
Wholesaler Wholesaler
Agent
1 level
2 level
3 level
4 level
Length of marketing channel
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Exclusive Distribution
Selective Distribution
Intensive Distribution
Channel StructureIntensity at various levels
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Practiced when a manufacturer restricts product distribution to a single retailer in a particular market or just a relatively few retailers
Products that are expensive, infrequently purchased, are sought after by consumers (i.e. specialty goods), or which require considerable after-sale servicing are the most likely candidates for exclusive distribution
Exclusive Distribution
Channel StructureIntensity at various levels
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Selectively distributed bands are available in multiple retail outlets in a particular market
Shopping products, or those that consumers seek out, are sold through selective distribution
Selective Distribution
Channel StructureIntensity at various levels
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Used when convenience products are sold through virtually every available retail outlet in a particular market, e.g. soft drinks, candy, gum, cigarettes
Intensive Distribution
Channel StructureIntensity at various levels
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Channel StructureTypes of intermediaries
FunctionalMiddlemen
Merchant Middlemen
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Channel StructureTypes of intermediaries
FunctionalMiddlemen
Do not take title to products; they simply facilitate the exchange process by performing buying and/or selling functions.
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Channel StructureTypes of intermediaries
Merchant Middlemen
Take title to products and resell them.
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Channel Structure
• Determinants of channel structure include:– Distribution tasks– Economics of distribution tasks– Management's desire for
distribution control
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Channel Structure• Distribution tasks
– Familial Relationship-style• Concentration• Equalization• Dispersion
– Selection process-style• Accumulating• Selecting• Sorting
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Channel Structure• Distribution tasks
– Resolve discrepancies between consumers and producers
• Quantity - buffer mass produced goods
• Assortment - allow producers to focus while providing customers selection
• Time - hold goods until ready• Place - connect producers and
consumers
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Channel Structure
• Economics of distribution tasks– Specialization or division of
labor
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Mfg. A Mfg. B Mfg. C
1 2 3 4 5 6 7 8
Without intermediaries
Channel Structure• Economics of distribution tasks
– Transaction efficiency
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Mfg. A Mfg. B Mfg. C
Intermediary
1 2 3 4 5 6 7 8
With intermediaries
Channel Structure• Economics of distribution tasks
– Transaction efficiency
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Channel Structure
• Management’s desire for control– The shorter the channel structure
the higher the control– Needed when a manufacturer must
protect product image, etc.
