w10 marketing channels and distributions

marketing channel

chains of organisations concerned with management of processes to create and move products

• reduce uncertainty by dividing tasks between producers, intermediaries and end users

intermediaries

organisations linking product to consumption

4 ways intermediaries create value

reduce complexity, reduces performance risk (routinisation), built assortment so reduce purchase risk, provide specialisation

7 types of intermediaries

agents/brokers, merchant, distributors, franchises, wholesalers, retailers, infomediaries

agent/brokers

principal intermediary between seller and buyer without taking ownership of offering

merchant

same as agent but takes ownership of product

distributor

offer value through services associated with inventory

franchises

hold contract to supply and market offering to requirements of franchisor

wholesalers

stocks good before next level of distribution and takes legal title of goods

retailers

sell directly to end users, purchase from manufacturers or wholesalers

infomediaries

internet based organisations that provide information to channel members

disintermediation

reduction in number of intermediaries required in marketing channel

• if producers can reach customers directly then no need

direct channel structure

seeing directly to end user customers

• large capital needed to reach customers, low variety but producer maintains control and strong customer relationships

indirect channel structure

uses intermediaries so producer focuses on making offering

multichannel structure

sells directly and uses intermediaries, increasing reach and product control

channel intensity

number of outlets an end user can use to buy an offering

3 types of channel intensity

intensive distribution, selective distribution, exclusive distribution

intensive distribution

placing an offering in as many outlets as possible

selective distribution

limited number of outlets are used due to high customer involvement

exclusive distribution

intermediaries given exclusive rights to market an offering within a territory, very few outlets

horizontal vs vertical channel conflict

horizontal is between members of same tier and vertical is between members of different tier

4 activities in SCM

fulfilment (locating stock and shipping other next channel member), transportation, stock management, warehousing

retailing

activities related to sale of product and services to consumers for personal use

4 types of convenience

access, search, possession, transaction

7 types of retailers

omnichannel (combination of store and online), department stores, discount retailers, limited line retailers, category killer retailers, supermarket, convenience stores