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MANAGING

MARKETINGCHANNELS AND

SUPPLY CHAINS

CHAPTER 

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What is a Marketing Channel?

A set of interdependent organizationsthat ease the transfer of ownership as

products move from producer tobusiness user or consumer.

A set of interdependent organizations

that ease the transfer of ownership asproducts move from producer to

business user or consumer.

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Retailer 

Retailer 

Wholesaler 

Wholesaler 

Agents andBrokers

Agents andBrokers

A channel intermediar thatsells mainl to customers.

A channel intermediar thatsells mainl to customers.

An institution that bus goodsfrom manufacturers! takes title

to goods! stores them!and resells and ships them.

An institution that bus goodsfrom manufacturers! takes title

to goods! stores them!and resells and ships them.

Wholesaling intermediaries whofacilitate the sale of a product brepresenting channel member.

Wholesaling intermediaries whofacilitate the sale of a product brepresenting channel member.

"ames for Marketing #ntermediaries

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$pecialization and%ivision of &abor 

$pecialization and%ivision of &abor 

'hreeMain

(unctions

'hreeMain

(unctions)vercoming

%iscrepancies

)vercoming%iscrepancies

*roviding Contact+fficienc

*roviding Contact+fficienc

,)B )( #"'+RM+M%#AR#+$

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• Provides efficiency and cost savings

• Attains economies of scale

• Aids producers who lack resources to market

directly

• Builds good relationships with customers

$*+C#A-A'#)" A"% %##$#)" )(

&AB)R

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%iscrepanc

of/uantit

%iscrepanc

of/uantit

%iscrepanc

of Assortment

%iscrepanc

of Assortment

'he difference between the

amount of product producedand the amount an end userwants to bu.

'he difference between the

amount of product producedand the amount an end userwants to bu.

'he lack of all the items a

customer needs to receive fullsatisfaction from a product orproducts.

'he lack of all the items acustomer needs to receive fullsatisfaction from a product orproducts.

)+RC)M#"0 %#$CR+*A"C#+$

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'emporal%iscrepanc

'emporal%iscrepanc

$patial%iscrepanc

$patial

%iscrepanc

  A situation that occurs when a

product is produced but acustomer is not read to bu it.

  A situation that occurs when a

product is produced but acustomer is not read to bu it.

 'he difference between thelocation of a producer and the

location of widelscattered markets.

 'he difference between thelocation of a producer and the

location of widelscattered markets.

)+RC)M#"0 %#$CR+*A"C#+$

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Contact Efficiency

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RetailersRetailersRetailersRetailers

MerchantMerchantWholesalersWholesalers

MerchantMerchantWholesalersWholesalers

AgentsAgentsandand

BrokersBrokers

AgentsAgentsandand

BrokersBrokers

'ake 'itle to 0oods'ake 'itle to 0oods'ake 'itle to 0oods'ake 'itle to 0oods

'ake 'itle to 0oods'ake 'itle to 0oods'ake 'itle to 0oods'ake 'itle to 0oods

%o ")' 'ake 'itle to 0oods%o ")' 'ake 'itle to 0oods%o ")' 'ake 'itle to 0oods%o ")' 'ake 'itle to 0oods

C1A""+& #"'+RM+M%#AR#+$

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C1A""+&$ ()R C)"$2M+R *R)%2C'$

  DIRECT RESELLER WHOL SAL AGENT

Producer Producer Producer Producer

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*roducer (actors*roducer (actors

*roduct (actors*roduct (actors

Market (actorsMarket (actors

(actors(actors

AffectingAffectingChannelChannelChoiceChoice

(actors(actorsAffectingAffectingChannelChannelChoiceChoice

+3clusive %istribution+3clusive %istribution

$elective %istribution$elective %istribution

#ntensive %istribution#ntensive %istribution

&evel of &evel of 

%istribution%istribution#ntensit#ntensit

&evel of &evel of 

%istribution%istribution#ntensit#ntensit

What makes ou choose a particular

channel?

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Market (actorsMarket (actors'hat Affect'hat AffectChannelChannelChoicesChoices

Market (actorsMarket (actors'hat Affect'hat AffectChannelChannelChoicesChoices

Customer *rofilesCustomer *rofiles

Consumer or #ndustrialCustomer 

Consumer or #ndustrial

Customer 

$ize of Market$ize of Market

0eographic &ocation

MAR4+' (AC')R$

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*roduct (actors*roduct (actors'hat Affect'hat Affect

ChannelChannelChoicesChoices

*roduct (actors*roduct (actors'hat Affect'hat Affect

ChannelChannelChoicesChoices

*roduct Comple3it*roduct Comple3it

*roduct *rice*roduct *rice

*roduct &ife Ccle*roduct &ife Ccle

*roduct %elicac*roduct %elicac

*R)%2C' (AC')R$

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*roducer (actors*roducer (actors'hat Affect'hat AffectChannelChannelChoicesChoices

*roducer (actors*roducer (actors'hat Affect'hat AffectChannelChannelChoicesChoices

*roducer Resources*roducer Resources

"umber of *roduct &ines"umber of *roduct &ines

%esire for Channel Control%esire for Channel Control

*R)%2C+R (AC')R$

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Intensity Level Intensity Level Intensity Level Intensity Level  ObjectiveObjectiveObjectiveObjective  Number ofNumber of

IntermediariesIntermediaries

Number ofNumber ofIntermediariesIntermediaries

IntensiveIntensive

SelectiveSelective

ExclusiveExclusive

Achieve mass marketselling.

Convenience goods.

Achieve mass market

selling.Convenience goods.

Work with selectedintermediaries.

$hopping and somespecialt goods.

Work with selectedintermediaries.

$hopping and somespecialt goods.

Work with singleintermediar. $pecialtgoods and industrial

e5uipment.

Work with singleintermediar. $pecialtgoods and industrial

e5uipment.

ManMan

$everal$everal

)ne)ne

&++&$ )( %#$'R#B2'#)" #"'+"$#'6

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&++&$ )( %#$'R#B2'#)" #"'+"$#'6

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CostCost

'ransit 'ime'ransit 'ime

ReliabilitReliabilit

CapabilitCapabilit

AccessibilitAccessibilit

'raceabilit'raceabilit

CriteriaCriteria

for for 

'ransportation'ransportationModeMode

ChoiceChoice

CriteriaCriteriafor for 

'ransportation'ransportationModeMode

ChoiceChoice

'RA"$*)R'A'#)" (AC')R$

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Advantages and disadvantages of five

modes of transportation

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+R'#CA& #"'+0RA'#)"

Backward an Forward Integraton ! 

"#$ t%e &te' "e(ore or a(ter $o# n t%e c%an

The degree to which a firm owns the stages

of its supply chain management 

from materials supply- to manufacture -to distribution- to sale.

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1)R#-)"'A& #"'+0RA'#)"

When a company takes over another in the same business, thus

eliminating a competitor and achieving a bigger market share

For example - Whole Foods buys Wild Oats to gain

a bigger share of the health food market

Problem is monopoly creation, so govts watch these sales closely

Mitsubishi

 Dealership

Mazda

Dealership

Nissan

Dealership

Toyota

Dealership

Honda

Dealership