BUSI 406 PRINCIPLES OF MARKETING: CHANNEL SYSTEMSToday and Looking Ahead…Today’s AgendaLet’s ReviewMarketing Strategy Planning ProcessMarketing Strategy Planning for PlaceToday’s GoalsDistribution Channels and LogisticsAdvantages of Direct ChannelsDirect Channels Are Common with Business Customers and ServicesIndirect ChannelsChannel Specialists May Reduce Discrepancies and SeparationsChannel Relationships Must Be ManagedProducers or Middlemen May Be Channel CaptainsVertical Marketing Systems Focus on Final CustomersThe Best Channel System Should Achieve Ideal Market ExposureVertical vs. Horizontal ArrangementsChannel Systems Can Be ComplexEntering International MarketsToday’s Take-AwaysLooking Ahead…BUSI 406PRINCIPLES OF MARKETING:CHANNEL SYSTEMSToday and Looking Ahead…Monday, October 13 – finish Chapter 10 and review for second examWednesday, October 15Second ExamJust bring a pen/pencilClosed book/closed notes examCovers material from chapters 6-10 and all class discussion and guest speaker presentationsMonday, October 20 – read Chapter 11Today’s Agenda•Any questions?•Let’s Review•Discuss material you read in Chapter 10Let’s ReviewProduct Life CycleIntro, Growth, Maturity and DeclineNew Product Failures - Why & How to AvoidNew Product Development ProcessIdea Generation, Screening, Idea Evaluation, Development and CommercializationMarketing Strategy Planning ProcessMarketing Strategy Planning for PlaceCH 12: Retailers, Wholesalers & Their Strategy Planning CH 12: Retailers, Wholesalers & Their Strategy Planning Place objectivesPlace objectivesDirect vs. indirectDirect vs. indirectChannel specialistsChannel specialistsChannel relationshipsChannel relationshipsCH 11: Distribution Customer Service & LogisticsCH 11: Distribution Customer Service & LogisticsCH 10: Place and Development of Channel SystemsCH 10: Place and Development of Channel SystemsMarket exposureMarket exposureToday’s GoalsMarketing Channels and Logistics Direct vs. Indirect ChannelsTraditional and Vertical Marketing SystemsManaging channels and avoiding vertical and horizontal conflictDistribution Channels and LogisticsPlace is NOT an automatic decision – more than one place arrangements may be appropriate and neededPlace decisions have long run effects“Making goods and services available in the right quantities and locations when customers want them.”Advantages of Direct ChannelsInternet Makes Direct Distribution EasierInternet Makes Direct Distribution EasierLower CostLower CostDirect Contact with CustomersDirect Contact with CustomersSuitable Intermediaries Not AvailableSuitable Intermediaries Not AvailableSomeSomeReasonsReasonsFor ChoosingFor ChoosingDirect ChannelsDirect ChannelsGreater ControlGreater ControlDirect Channels Are Common with Business Customers and ServicesIndirect ChannelsChannel Specialists May Reduce Discrepancies and SeparationsThe 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 Relationships Must Be ManagedRole of Channel CaptainRole of Channel CaptainConflict HandlingConflict HandlingWhole-Channel Product-Market CommitmentWhole-Channel Product-Market CommitmentChoosing the Type of RelationshipChoosing the Type of RelationshipKeyIssues InChannelManagementKeyIssues InChannelManagementProducers or Middlemen May Be Channel CaptainsVertical Marketing Systems Focus on Final CustomersCharacteristicsType of channelLittle ornoneNoneTypical “inde-pendents”Amount of cooperationTraditionalVertical marketing systemsAdministeredContractual CorporateControl maintained byExamplesFairly goodto goodContracts McDonald’sCompleteOne company ownershipFlorsheimSome to goodEconomic power and leadershipGeneral ElectricThe Best Channel System Should Achieve Ideal Market ExposureIntensiveIntensiveSelectiveSelective = number ofoutletsExclusiveExclusiveMarketExposureStrategiesMarketExposureStrategiesVertical vs. Horizontal ArrangementsRetailer 1Retailer 1RetailerRetailerRetailerRetailerHorizontal Arrangements Are IllegalRetailer 2Retailer 2Retailer 3Retailer 3ProducerProducerVerticalArrangementsMay Be LegalWholesalerWholesalerChannel Systems Can Be ComplexEntering International MarketsExportingExportingLicensingLicensingManagement ContractingManagement ContractingJointVentureJointVentureDirectInvestmentDirectInvestmentGenerally increasing investment, risk, and control of marketingToday’s Take-AwaysChannels are critical in making goods and services available in the right quantities and locations when customers want them.Need to find the best channel system to meet your product availability goals as well as to satisfy your customers!Channel systems can be complex (esp. international ones) & must be actively managed.Looking Ahead…Monday, October 13 – finish Chapter 10 and review for second examWednesday, October 15Second ExamJust bring a pen/pencilClosed book/closed notes examCovers material from chapters 6-10 and all class discussion and guest speaker presentationsMonday, October 20 – read Chapter