Managing Marketing Channels and wholesaling o Intro Callaway golf online store o Marketing Channel of Distribution Marketing channel individuals and firms involved in the process of making a product or service available for use or consumption by consumers pipeline o Value of Intermediaries Middleman anyone between manufacturer and end user Agent or Broker legal authority to act on behalf of manufacturer Wholesaler sells to other intermediaries usually to retailers Retailer sells to consumers Distributor more common in B2B or wholesalers Dealer more general than distributor Important Functions o Transactional Functions Buying Selling Risk taking o Logistical Function Assorting Storing Sorting Transporting o Facilitating Function Financing Grading Marketing information and research o Consumer benefits from intermediaries Getting what you want when where and how you want them Time Place Form Possession Marketing Channel For Consumer Goods and Services 4 Possibilities o P W R C o Direct channel produce and end user deal directly with each other The producer must perform all channel functions o Indirect Channel Intermediaries in between Most common for large retailer auto Small retailers and manufacturers have the most indirect path because they need agents to coordinate Marketing channel for Business goods 4 Possibilities o Usually shorter and rely on one intermediary or none at all because business users are fewer in number concentrated geographically buy in larger quantities Electronic Marketing Channels o Employ the internet to make goods available for consumption or use by consumers o Combine electronic and traditional Lower cost than traditional Problems Such as automobiles or health care Direct and Multichannel Marketing Incapable of performing elements of logistical function o Direct marketing channels allow consumers to buy by interacting with various advertising media without a face to face meeting with a sales person Ex Mail order catalog telemarketing o Multichannel the blending of different communication and delivery channels that are mutually reinforcing in attracting retaining and building relationships with consumers who shop and buy in traditional and online Wants to integrate channels Can leverage the value adding capabilities of different channels By adding convince and seamlessness Dual Distribution and Strategic channel alliances o Dual firm reaches different buyers by employing two or more different types of channels for the same product Minimize cannibalization of the family brand and differentiate the channels o Strategic Channel alliances one s firm s marketing channel is used to sell another firm s products Popular in global marketing Save time and money Going deeper o Merchant Wholesalers independently owned that take title to the merchandise they handle this is common 1 Full Service perform all channel functions 2 Limited Service 1 General Merchandise Full line broad assortment and perform all channel functions but not much depth o Hardware drug clothing 2 Specialty Limited Line narrow range of products buyt extensive assortment o Health foods auto seafood 1 Rack jobbers furnish the racks or shelves that display merchandise in retail stores perform all channel functions sell on consignment to retailers only bill for what they sell 2 Cash and carry take title to merchandise but sell only to buyers who call on them pay cash for merchandise and furnish their own transportation for merchandise o Have limited assortment and no deliveries or credit nor supply market info Ex Electric supplies office supplies groceries 3 Drop shippers Desk Jobbers own the merchandise they sell but do not physically handle stock or deliver it o They solicit orders from retailers and have it directly shipped from producer to buyer o Ex Bulk of coal lumber 4 Truck Jobber small wholesalers with a small warehouse from which they stock their trucks for distribution to retailers o Limited assortment of fast moving or perishable items in their original packages Ex Dairy bakery meat o Agents and Brokers Unlike wholesaler Do not take title to merchandise and typically perform Make money from commissions or fees for their services not from the fewer channel functions sale of merchandise they own Two major types of Agents 1 Manufacturer s agents rep work for several producers and carry noncompetitive complementary merchandise in an exclusive territory o Act as a producer s sales arm and are responsible for transactional channel functions o Common with auto footwear steel 2 Selling Agents represent a single producer and are responsible for the entire marketing function of that producer o Design promotional plan set prices and strategy Small producers in apparel and food industry Broker independent firms whose function is to bring buyers and sellers together to make a sale Have no continuous relationship with the buyer and seller like agents buy negotiate a contract between two parties then move on o Ex Real estate Unique case food broker act on behalf of producer on a permanent basis and receive commission Manufacturer s branches and sales offices are wholly owned extensions of the producer that perform the wholesaling activity Manufacturer s branch office carries a producer s inventory and performs the functions of a full service wholesaler Manufacturer s sales office does not carry inventory and only carries out sales an alternative to agents and brokers Vertical Marketing Systems and Channel Partnerships o Professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximizing marketing impact o Types 1 Corporate Systems under a single ownership Forward integration own production and another intermediary Backward integration retail own manufacturer Kroger These increase costs 2 Contractual Systems most popular 3 Variations o 1 Wholesaler sponsored voluntary chains o 2 Retail sponsored cooperatives o 3 Franchising most visible 4 Types 1 Manufacturer sponsored retail auto 2 Manufacturer sponsored wholesale soft drinks 3 Service Sponsored retail McD 4 Service Sponsored franchise allow to dispense under tradename 3 Administered Systems achieve coordination at successive stages rather than through ownership 4 Channel Partnerships Consists of agreements among members for ordering and physically distributing products through the channel to the end consumer o Collaborative use of information and communication tech Unsophisticated and low value
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