Marketing Channels: MARKETING AN INTRODUCTION Armstrong/Kotler. Delivering Customer Value

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1 10 MARKETING AN INTRODUCTION Armstrong/Kotler Marketing Channels: Delivering Customer Value

2 Chapter Outline Supply Chains and the Value Delivery Network The Nature and Importance of Marketing Channels Channel Behavior and Organization Channel Design Decisions Channel Management Decisions Marketing Logistics and Supply Chain Management 10-2

3 Value Delivery Network A value delivery network is made up of the company, suppliers, distributors, and ultimately customers who partner with each other to improve the performance of the entire system. 10-3

4 Marketing Channel Marketing channel is a set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user. 10-4

5 Channel Members Add Value 10-5

6 Discussion Question How do manufacturers use online distributors for their products? 10-6

7 Channel Members Add Value Information Promotion Contact Matching Negotiation Physical distribution Financing Risk taking 10-7

8 Number of Channel Levels 10-8

9 Discussion Question Why might a company like Dell have several types of channels including direct? 10-9

10 Channel Behavior Channel conflict is disagreement among marketing channel members on goals, roles, and rewards. Horizontal conflict Vertical conflict 10-10

11 Vertical Marketing Systems 10-11

12 Types of Vertical Marketing Systems Corporate VMS Integrates successive stages of production and distribution under single ownership Contractual VMS Consists of independent firms at different levels of production and distribution who join together through contracts includes franchises Administered VMS Leadership is assumed not through common ownership or contractual ties but through the size and power of one or a few dominant channel members

13 Types of Franchises Manufacturersponsored retailer Manufacturersponsored wholesaler Service-firmsponsored retailer 10-13

14 Horizontal Marketing Systems Horizontal marketing system is a channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity

15 Multichannel Distribution Systems 10-15

16 Changing Channel Organization Disintermediation is the cutting out of marketing channel intermediaries by product or service producers, or the displacement of traditional by radical new types of intermediaries

17 Discussion Question In what types of industries do we see the most disintermediation? 10-17

18 Channel Design Decisions Marketing channel design includes designing effective marketing channels by analyzing consumer needs, setting channel objectives, identifying major channel alternatives, and evaluating them

19 Number of Marketing Intermediaries Selective Distribution Exclusive Distribution Intensive Distribution 10-19

20 Channel Management Decisions Marketing channel management involves selecting, managing, and motivating individual channel members and evaluating their performance over time

21 Public Policy and Distribution Decisions Exclusive dealing Be careful when using: Territorial agreements Tying agreements 10-21

22 Marketing Logistics Marketing logistics (or physical distribution) involves the planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to points of consumption to meet customer requirements at a profit

23 Supply Chain management 10-23

24 Major Logistics Functions Warehousing Inventory management Transportation Logistics Information management 10-24

25 Integrated Logistics Management Integrated logistics management is the logistics concept that emphasizes teamwork, both inside the company and among all the marketing channel organizations, to maximize the performance of the entire distribution system

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