Marketing Framework/Process
Introduction to Marketing
CHAPTER 1
Company & Marketing
Strategy
CHAPTER 2
Marketing Environment
CHAPTER 3
Chapter 12: Marketing Mix (4Ps): PLACE
Marketing Channels: Delivering Customer Value
Lesson Learning Outcomes
• LO1. Explain why companies use marketing channels and discuss the
functions these channels perform.
• LO2. Discuss how channel members interact and how they organize to
perform the work of the channel.
• LO3. Identify the major channel alternatives open to a company.
• LO4. Discuss the nature and importance of marketing logistics and
integrated supply chain management.
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LO1: Explain why companies use marketing
channels and discuss the functions these channels
perform.
Where can you buy…?
Supply Chains and the Value Delivery Network
• Upstream partners are firms that supply
raw materials, components, parts,
information, finances, and expertise needed
to create a product or service.
• Downstream partners include the
marketing channels or distribution channels
that look toward the customer, including
retailers and wholesalers.
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Supply Chains and the Value Delivery Network
• Supply chain “make and sell” view includes the firm’s raw materials,
productive inputs, and factory capacity.
• Demand chain “sense and respond” view suggests that planning
starts with the needs of the target customer.
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Supply Chains and the Value Delivery Network
Value delivery network is composed
of the company, suppliers,
distributors, and, ultimately,
customers who partner with each
other to improve the performance of
the entire system.
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The Nature and Importance of Marketing Channels
Marketing channel (distribution 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.
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The Nature and Importance of Marketing Channels
How Channel Members Add Value
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The Nature and Importance of Marketing Channels
How Channel Members Add
Value
• Gather and distribute information • Negotiate transaction
• Engage in promotion • Physical distribution of goods
• Contact prospective buyers • Finance transactions along channel
• Match offer to buyer’s needs • Assume risks of channel work
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The Nature and Importance of Marketing Channels
Number of
Channel Levels
LO2: Discuss how channel members interact and
how they organize to perform the work of the
channel.
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Channel Behavior and Organization
Channel Behavior
• Marketing channels consist of firms that have partnered for their
common good with each member playing a specialized role.
• Channel conflict refers to disagreement among channel members
over goals, roles, and rewards.
• Horizontal conflict
• Vertical conflict
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Channel Strategies
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Channel Strategies
Conventional
PRODUCER
Conventional distribution systems consist of one
WHOLESALER or more independent producers, wholesalers,
and retailers, each separate business seeking to
maximize its own profits, perhaps even at the
RETAILER expense of profits for the system as a whole.
CONSUMER
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Channel Strategies
Vertical Marketing System
PRODUCER • Vertical Marketing Systems (VMS) provides
channel leadership and consist of producers,
wholesalers, and retailers acting as a unified
WHOLESALER
system.
• 2 key types
RETAILER 1. Corporate VMS
2. Contractual VMS
CONSUMER
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Channel Behavior and Organization
Vertical Marketing Systems
1. Corporate VMS combine successive stages of production and
distribution under single ownership.
2. Contractual VMS consist of independent firms at different levels of
production and distribution who join together through contracts.
• Franchise organization is a contractual vertical marketing system in which a
channel member, called a franchisor, links several stages in the production-
distribution process.
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Channel Behavior and Organization
Multichannel Distribution
Systems
• Multichannel distribution systems
are systems in which a single firm
sets up two or more marketing
channels to reach one or more
customer segments.
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Channel Behavior and Organization
Changing Channel Organization
• Disintermediation is the cutting out of marketing channel
intermediaries by producers or the displacement of traditional
resellers by new intermediaries.
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LO3: Identify the major channel alternatives
open to a company.
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Channel Design Decisions
Analyzing Setting
consumer channel
needs objectives
Identifying Evaluating
channel channel
alternatives alternatives
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Channel Design Decisions
Setting Channel Objectives
• Determine targeted levels of customer service
• Balance consumer needs against costs and customer price
preferences
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Channel Design Decisions
Identifying Major Alternatives
• Types of intermediaries refers to channel members available to carry
out channel work. Most companies face many channel member
choices.
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Channel Design Decisions
Identifying Major Alternatives
• Number of Marketing Intermediaries
Intensive distribution
Exclusive distribution
Selective distribution
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Channel Design Decisions
Identifying Major Alternatives
Responsibilities of Channel Members: a producer and the
intermediaries need to agree on
• Price policies
• Conditions of sale
• Territory rights
• Specific services
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Channel Design Decisions
Evaluating the Major Alternatives
• Economic criteria
• Control issues
• Adaptability criteria
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Channel Design Decisions
Designing International Distribution Channels
• Channel systems can vary from country to country.
• Marketers must be able to adapt channel strategies to structures
within each country.
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LO 4. Discuss the nature and importance of
marketing logistics and integrated supply chain
management.
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Marketing Logistics and Supply Chain
Management
Nature and Importance of Marketing Logistics
• Marketing logistics (physical distribution) involves planning,
implementing, and controlling the physical flow of goods, services,
and related information from points of origin to points of
consumption to meet consumer requirements at a profit.
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Marketing Logistics and Supply Chain
Management
Nature and Importance of Marketing Logistics
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Marketing Logistics and Supply Chain
Management
Nature and Importance of Marketing Logistics
• Supply chain management involves managing upstream and
downstream value-added flows of materials, final goods, and related
information among suppliers, the company, resellers, and final
consumers.
• Goal of marketing logistics should be to provide a targeted level of
customer service at the least cost.
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Marketing Logistics and Supply Chain
Management
Major Logistics Functions
Inventory
Warehousing
management
Logistics
Transportation information
management
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Reviewing questions
1. What is a distribution channel? Describe how marketing channel
members add value in the channel of distribution between
manufacturers and consumers
2. Differentiate vertical marketing systems (VMS) and conventional
marketing systems (=CMS).
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Questions?
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The last P…
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