CHANNEL INTENSITYDEFINITION {PURPOSE}: Refers to the number of LOCATIONS (not channels) through which a company sells its products in a GIVEN Market Area (relative to all possible locations for that product). It determines in part the level of coverage market plan can impact.CHANNEL STRUCTUREDEFINITION {PURPOSE}: Refers to the number of DISTINCT Distribution Channels used by an organization; and the number of DISTINCT units (producers, intermediaries, and customers) in a given distribution channel.MKT 327 Introduction to Marketing 1st EditionExam # 4 Study Guide Lectures: 20 - 25Lecture 20 (September 9) 1) Essence of marketinga) Build connections and relationshipsb) And use them as a stage for creating valuec) And capturing value (sales)2) Physical connection a) Channels b) Marketing distribution channeli) A set of interdependent organizations working collectively to making a product or service available for purchase (1) Excludes from value chain all organizations ONLY involved in transport or supplyii) The most fundamental way an organization physically comes into contact with a customer is through the product. A customer can’t physically get their hands on a product or service though without a DISTRIBUTION CHANNEL(1) Channel decisions create time and place utility; and possession utility(a) Intermediaries can also create symbolic and experiential value 3) Marketing channelsa) Directi) Manufacturerii) Customer b) Indirecti) Manufacturerii) Retailer iii) Or wholesaler  retaileriv) Or wholesaler  jobber  retailerv) Customer c) Reversei) Indirect or directii) Consumeriii) Manufacturer 4) Importance of channels a) “Our selections are often made for us” – Devil Wears Prada example b) Address market discrepanciesc) Efficient performance of universal marketing functions 5) Coordinating marketing mix/ managing channela) Push strategyi) Focus on selling ii) To tradeiii) Trusting consumersiv) Buy what’s available b) Pull strategyi) Focus on sellingii) To consumeriii) Trusting tradeiv) Carry what’s demanded6) Market discrepancies a) Discrepancy in time b) Discrepancy in placec) Discrepancy in assortment and allocation 7) Universal marketing functionsa) Transactional i) Buying and sellingii) Risk taking b) Logisticali) Transporting and storageii) Standardization and assortingiii) Making and breaking bulkc) Facilitatingi) Communicationii) Grading iii) Financing 8) Channel decisionsa) Channel organizationsi) Specifies the legal structure between members of a distribution channel and consequently the extent of administrative control and coordination ii) Conventional iii) Vertical (1) Corporate (2) Administered (3) Contractual (a) Wholesale sponsored(b) Franchise(i) Manufacturer sponsored retail(ii) Service sponsored retail(iii) Manufacturer sponsored wholesale(iv) Service sponsored (c) Retail sponsored b) Channel structurec) Channel intensityd) Channel member selectione) Channel management f) Supply chain decisionsi) Logistics(1) Transportation(2) Warehousing(3) Materials handlingii) Inventory managementiii) Order processing iv) Customer service v) Total cost conceptvi) Customer relationships (CRM)vii) Congruence 9) Channel criteria a) Cost b) Conflictc) Coveraged) Controle) Connectivity (impact on value)Lecture 21 ()1) Channel intensitya) Refers to the number of locations (not channels) through which a company sells its products in a given market area (relative to all possible locations for that product)i) Impacts coverage2) Distribution intensity/ coverage guidelinesa) Intensive distribution- convenience goodsi) Competitors: intensive or selective no conflict with core distributorsb) Selective distribution- shopping goodsi) Competitors: selective or exclusive no conflict with core distributorsc) Exclusive distribution- specialty goods i) Competitors: exclusive no conflict with core distributors3) Distributiona) Has very targeted market with a specialty soft drinkb) High conflict (obstacles in getting into traditional outlets)i) Distribution of Jones Soda began with what we call our “alternative distribution strategy.” Jones Soda Co. placed it’s own coolers, bearing their signature flames, in some truly unique venues, such as skate, surf, and snowboarding shops, tattoo or piercing parlors, as well as in individual fashion stores and national retail clothing and music stores.ii) Following the execution of the alternative distribution strategy, Jones began an up and down the street (attack) of the marketplace; this time placing product in convenience and food storesiii) Finally, the company has now began to achieve larger chain store listing with companies such as Starbucks, Safeway, etc.4) Channel member selectiona) Addresses the type of intermediaries of a particular distribution channel; based on which universal marketing functions need to be performed outside organization and what services, costs, and images provided to consumers. b) Impacts costs and competencies5) Wholesaling a) The activities involved in executing universal marketing functions and selling goods for resale to retailers and other businessesb) Impact on value creationi) Universal marketing functions(1) Time(2) Place(3) Possession 6) Channel member selection decision frameworka) Alternativesi) Merchant(1) Full service(2) Limited serviceii) Broker/agentiii) Manufacturer’s Repb) Decision criteria i) Universal marketing functions(1) Customer priorities(2) Market efficiencies(3) Market effectivenessii) Competitive advantages (1) Product line/mix7) Wholesalersa) Take title to goods8) Brokers agents9) Retailers a) The activities involved in assorting and allocating products or services to sell them directly to end users for personal or institutional usei) Impact on value creation(1) Assortment function(a) Time/place(2) Create value(a) Form(i) Services(3) Allocation function(a) Time/place10) Channel member selection decision framework continued a) Alternativei) Storeii) Direct marketingiii) Internetb) Decision criteriai) Services and function(1) Costs (2) Positioning/image(3) Allocation and assortment(4) Channel structure11) Channel management issuesa) RELATIONSHIPS b) Strategy executionc) Addresses the exact type and nature of relationships between the marketer’s organization and the members of distribution channel, and how that relationship is usedto help execute the marketing tactical plani) Impacts conflict and competencies Lecture 22 ()PURPOSE>>IMPACT ON VALUE CREATION>>BASIC