MKTG CH 10

transactional function

• buying: purchasing products for resale

• selling: contacting potential customers, promoting products, and seeking orders

• risk-taking: assuming business risks in the ownership[ of inventory

logistical function

• selection: putting together a selection of products from several different sources

• storing: assembling and protecting products at a convenient location

• sorting: purchasing in large quantities and dividing into smaller amounts

• transporting: physically moving a product to customers

facilitating function

• financing: extending credit to customers

• marketing info and research: providing info to customers and suppliers, including competitive conditions and trends

consumer benefits from various utilities provided by marketing channels

1. time

2. place

3. form

4. information

5. possession

channel layer

layer of intermediaries who perform some work in bringing product and its ownership closer to final buyer

* number of intermediary levels indicate length of a channel

direct marketing channel

no intermediary levels

* manufacturer selling directly to consumers

indirect marketing channel

one or more intermediaries

dual distribution

firm reaches different buyers by using 2 or more different types of channels for the same basic product

multichannel marketing

blending of different comms and delivery channels that mutually reinforcing in attracting, retaining, and building relationships with consumers

• transactional websites

• promotional websites

cross channel shopper

consumers research online and purchase at a retail store

• desire to compare among different retailers

• need for more info than is in store

• ease of comparing options

omni channel retailing

seamless experience among all available shopping channels

• online, physical store, phone

• ex: customer sees ad on facebook → goes to website

• customer visit website and browse products - finds t shirt wants to buy, add to cart

• customer comes to store to try out t shirt - likes t shirt but colour sold out

• manufacturer directly ship t shirt to house

multichannel vs omnichannel

• multichannel branches out

  • person → store or web or mobile or social

• omnichannel makes a circle

  • person → store and web and social and mobile all connected

vertical marketing system

distributation channel strucutre in which producers, wholesalers, and retailers act as a unified network

* one channel member owns the others, has contacts with them or wields so much power that all channel members cooperate

corporate VMS

• coordination and conflict management are attained through common ownership at different levels of the channel

• ex: INDITEX - owns Zara, mashimo dutti, bershka

  • world’s largest fashion retailers

contractual VMS

* attained through contractual agreements among channel members
* ex: ford and its network of independent franchised dealers

administered VMS

leadership assumed by one or a few dominant channel members

* ex: procter & gamble

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factors affecting channel choice

• market

  • geographic concentration

  • number of potential customers

  • type of market

  • order size

• product

  • technical factors

  • perishability

  • unit value

  • product life cycle

• company

  • financial resources and ability of management

  • desire for channel control

channel design considerations

1. target market coverage

   1. intensive, exclusive, or selective distribution

2. satisfying buyer requirements

   1. info, convenience, variety, pre/ post sale services

3. profitability

   1. distribution, ads, selling expenses

intenstive distribution

• ideal for producers of convenience products and common raw materials

• strat = stock their products in as many outlets as possible

selective distribution

use of more than one, but fewer than all of the intermediaries who are willing to carry a company’s decision

* ex: best buy

exclusive distribution

• producers limit number of intermediaries handling their products

• producer gives only a limited number of dealers the exclusive right to distribute its products in their territories