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Chapter 10

Marketing Channels
Delivering Customer Value

Dr. Kao
Group 9
M0345008 Zoe / M0345016 Jacky

Outline
1.

Explain why companies use marketing channels and


discuss the functions these channels perform.

2.

Discuss how channel members interact and how they


organize to perform the work of the channel.

3.

Identify the major channel alternatives.

4.

Explain how companies select, motivate,


and evaluate channel members.

5.

Discuss the nature and importance of marketing


logistics and integrated supply chain management.

Supply Chain

Producing a product or service and making it available to


buyers requires building relationships not only with
customers but also with key suppliers and resellers in the
companys supply chain.

Value Delivery Network

A network composed of the company, suppliers,


distributors, and, ultimately, customers who partner to
help the entire system deliver better customer value.

The nature and important of Marketing


Channel

Marketing channel (or distribution channel)--- a set of


interdependent organizations that help make a product or
service available for use or consumption by the consumer or
business user.

How Channel member Add value?

A network composed of the company, suppliers,


distributors, and, ultimately, customers who partner to
help the entire system deliver better customer value.

How Channel member Add value?

Marketing Channels Key Functions


Members of the marketing channel perform many key
functions. Some help to complete transactions:

Information

Promotion

Contact

Negotiation

Marketing Channels Key Functions


Other help to fulfill the completed transactions:

Physical distribution

Financing

Risk taking

Number of Channel Levels


Channel levels
A layer of intermediaries
that performs some work
in bringing the product
and its ownership closer to
the final buyer.

Number of Channel Levels


Direct marketing
channel
A marketing channel that has
no intermediary levels.

Number of Channel Levels


Indirect marketing
channel
A marketing channel containing
one or more intermediary levels.

Channel Behavior and Organization

Channel Behavior and Organization

Channel Behavior and Organization


Horizontal conflict
Occurs among firms at the
same level of the channel.

Channel Behavior and Organization


Vertical conflict
Conflict between different
levels of the same channel.
(more common)

Vertical Marketing Systems

Conventi
onal
distributi
on
channel

Vertical Marketing Systems

1. Corporate VMS Vertical


2. Contractual VMSMarketin
g
3. Administered VMS
system(V
MS)

Vertical Marketing Systems

Corporate VMS

A vertical marketing
system that combines
successive stages of
production and
distribution under single
ownership.

Vertical
Marketin
g
system(V
MS)

Vertical Marketing Systems

Contractual VMS
A vertical marketing
system in which
independent firms at
different levels of
production and
distribution join together
through contracts.

Vertical
Marketin
g
system(V
MS)

Contractual VMS

Vertical Marketing Systems

Administered VMS
A vertical marketing
system that coordinates
successive stages of
production and
distribution through the
size and power of one of
the parties.

Vertical
Marketin
g
system(V
MS)

Horizontal Marketing Systems

A channel arrangement
in which two or more
companies at one level
join together to follow a
new marketing
opportunity.

Multichannel Distribution Systems

Changing Channel Organization


Disintermedia
tion
The cutting out of
marketing channel
intermediaries by
product or service
producers or the
displacement of
traditional resellers
by radical new types
of intermediaries.

Changing Channel Organization


Disintermedia
tion
The cutting out of
marketing channel
intermediaries by
product or service
producers or the
displacement of
traditional resellers
by radical new types
of intermediaries.

Changing Channel Organization

Channel Design Decisions

Analyzing Consumer
Needs
Each channel member and level
adds value for the customer. Thus,
designing the marketing channel
stars with finding out what target
consumers want from the channel.

Nearby locations?
Buy in person?
Value breadth of
assortment?
Want many add-on
services?

Channel Design Decisions

Setting Channel
Objectives
Companies should state their
marketing channel objectives in terms
of targeted levels of customer service.

Channel Design Decisions


Identifying Major Alternatives

Types of Intermediaries

Companys marketing group


Manufacturing or Agent
Distributor of industrial products

Number of Marketing
Intermediaries

Intensive distribution (ex:


Toothpaste)
Exclusive distribution(ex: Bently)
Responsibilities
of Channel
Selective distribution(ex: Sony)

Members

The producer and the


intermediaries need to agree on
the terms and responsibilities of

Channel Design Decisions


Evaluating the Major Alternatives
Suppose a company has identified several channel
alternatives and wants to select the one that will
best satisfy its long-run objectives. Each
alternative should be evaluated against economic,
control, and adaptability criteria.

Channel Design Decisions


Designing International Distribution Channels

International marketers face many additional


complexities in designing their channels. Each
country has its own unique distribution system that
has evolved over time and changes very slowly.

Channel Management Decisions


Selecting Channel Members

Managing and Motivating Channel Members

Evaluating Channel Member

Public Policy and Distribution Decisions


Exclusive distribution
Exclusive dealing
Exclusive territorial agreements
Full-line forcing

Marketing Logistics and


Supply Chain Management
Nature and Importance of Marketing logistics

Outbou
Inboun
nd
d
logistics
logistic
Resellers
Suppliers
Company
s

Reverse logistics

Customer

Marketing Logistics and


Supply Chain Management
Benefit of the logistics System
Gain a powerful competitive advantage
Yield tremendous cost savings
Easy to manage Variety of products

Marketing Logistics and


Supply Chain Management
Goal of the logistics System
The goal of marketing
logistics should be to
provide a targeted level of
customer service at the least
cost.

Marketing Logistics and


Supply Chain Management

Major Logistics Functions


Warehousing
Inventory Management
Transportation
Logistics Information Management

Marketing Logistics and


Supply Chain Management
Integrated Logistics Management
Cross-Functional Teamwork Inside the
Company
Building Logistics Partnership
Third-Party Logistics

Thank
for
listening