Ch. 10: Marketing Channels – Delivering Customer Value- Distribution Channel: Set of interdependent organizations involved in the process of making a product available for use or consumption by the consumer or business user.- (3) Marketing Intermediaries are used b/c of efficiency in making goods available to target markets. Offers contacts, experience, specialization, and scale of operation. Matches supply to demand. Reduces channel transactions. (Intensive, selective and exclusive distribution)- Changing channel organization: A major trend is toward disintermediation, which means that product and service producers are bypassing intermediaries and going directly to final buyers or that new types of channel intermediaries are emerging to displace traditional ones.- Horizontal Conflict occurs among firms at the same level of the channel, i.e retailer to retailer.- Vertical Conflict occurs between different levels of the same channel, i.e. wholesaler to retailer- Innovations in Marketing Systems:o Horizontal Marketing System: 2+companies at 1 channel level (ex: banks in grocery store)o Hybrid marketing System: single firm set up 2+ marketing channel 1+ customer (ex:online)- Channels of Distribution Issues that need to be addressed: o What should the channel look like? (Channel Design) Product availability – intensive, selective, exclusive (Rolex not in Walmart) Promotional Effort – effective point of purchase promo and personal selling support Customer Service – installation, training, and repair Market Information – keep track of whats bought and sold to see whats doing besto How do I get the channel partners to do what I want them to do? (Channel Management) Answer: Incentives ***Sales Person Incentive Fund (SPIF) :Incentive to provide that level or salesman support. This is where the sales person will take the customer when they ask for a product, whoever is doing this SPIF this week Conventional distribution channel Vertical marketing system (box) – Corporate (sears), Contractual (franchising), Administered (Kraft) degree of direct control Ch. 11: Retailing and Wholesaling- Retailing: includes all the activities involved in selling products or services directly to final consumers for their personal use as well as business markets- Retailers are classified based on: o Amount of service they offer:  Self-Service Retailers: own “locate/compare/select” process (grocery store) Limited-Service Retailers: carry more goods that need info explained (dillards) Full Service Retailers: need to be “waited on” (jewelry store, car service)o Breadth & depth of product lines Specialty Stores: Carry narrow product lines with deep assortments (Lids) Department Stores: wide variety of product line, separate dep. With buyers (Macy) Supermarket: low-cost, low-margin, high-volume, self service, wide variety Convenience Stores: small near residential area, long hours, high turnover Superstores: larger than supermarkets & large assortment of food/nonfood Category Killers: NOT WALMART. deep assortment. Special emp. (Lowes, best buy)o Relative prices classification Discount Store: sells standard merchandise at lower prices (walmart) Off Price Retailer: buys less than reg. prices & sells less than retail (biglots)- Factory Outlet: manufactures surplus, discontinued, irregular goods (Nike)- Warehouse Club: limited selection, brand name, membership (sams)o Organizational Classification Chain Stores: 2 or more outlets owned/controlled, central buying, sell similar Voluntary chain: wholesaler-sponsored group of independent retailers. bulk buying& common merchandising. (IGA – Independent Grocers of America) Franchise: (45%) contract association between a manufacturer (franchiser) and independent people (franchisees) to operate business (hotels)- Retailer Marketing Decisionso Retailer Strategy: Segmentation and targeting, store differentiation & positing, Whole foodso Retail marketing mix: must define and profile target market before making mix decisions- Assortment and Services Decisionso Product Assortment: Brand of merchandise & merchandising eventso Services Mix: Different numbers/types if services are key to nonprice store differentiationo Store Atmosphere: Physical layout and feel of the store- Lifestyle Centers: smaller with upscale stores & nonretail activities like movie and food (HTC) - Power Center: huge enclosed shopping malls- Future of Retailing: New Retail Forms and Shortening Retail Life Cycles, Growth of Non-store Retailing, Retail Convergence, Rise of the Mega-retailers, Growing Importance of Retail Technology,Global Expansion of Major Retailers, Retail Stores as “Communities” or “Hangouts”. There’s been a problem with showcasing b/c people will go to stores and see a product then buy online so now retailers are price matching - Wholesaling: all activities involved in selling goods to those buying for resale/business useo Merchant wholesalers: largest group 50% (full-service & limited-service) (titles to goods)o Brokers and Agents: don’t take title to goods, fewer functions, agents represent buyers, brokers bring buyers and sellers together, most common are manufactures’’ agents- Trends in Wholesalingo Must constantly improve services and reduce costso Distinction Between Large Retailers & Wholesalers is Blurryo Will Continue to Increase the Services Provided to Retailerso Wholesalers Are Now Going