CHAPTER 8

DISTRIBUTION STRATEGY
 Product: is a good or Price: is the amount
service that satisfies the of money customers
wants of a company’s must pay to obtain
target market. the product.

PRODUCT Marketin PRICE

g Mix
(4Ps)

Promotion: is defined Place: includes

as the activities that company activities
communicate the merits that make a
PROMOTION PLACE product available
of the product and
persuade target to target
customers to buy it. consumers.
 Product: is a good or Price: is the amount
service that satisfies the of money customers
wants of a company’s must pay to obtain
target market. the product.

PRODUCT Marketin PRICE

g Mix
(4Ps)

Promotion: is defined Place: includes

as the activities that company activities
communicate the merits that make a
PROMOTION PLACE product available
of the product and
persuade target to target
customers to buy it. consumers.
4Ps (seller’s mind- (buyer’s mind-set) 4Cs
set)
Customers are buying value
Businesses sell products and solutions to problems
PRODUCT CUSTOMER VALUE

Customer refers to the total

Price costs of obtaining, using,
and disposing of a product
PRICE CUSTOMER COSTS

Activities that make a product

Easy to buying
available to target consumers.
PLACE CONVENIENCE

Consumers want two-way

Eg. 30 second
communication and
commercials on
relationships with
television and/or radio
businesses
PROMOTION COMMUNICATION
4Ps (seller’s mind- (buyer’s mind-set) 4Cs
set)
Customers are buying value
Businesses sell products and solutions to problems
PRODUCT CUSTOMER VALUE

Customer refers to the total

Price costs of obtaining, using,
and disposing of a product
PRICE CUSTOMER COSTS

Activities that make a product

Easy to buying
available to target consumers.
PLACE CONVENIENCE

Consumers want two-way

Eg. 30 second
communication and
commercials on
relationships with
television and/or radio
businesses
PROMOTION COMMUNICATION
  The Nature and Importance of Marketing

Channels
CONTEN  Number of Channel Levels
TS  Channel Systems

 Channel Design Decisions

 Channel Management Decisions

 Channel conflict

 Marketing Logistics
 1
The Nature and
Importance of
Marketing Channels
1. The Nature and Importance of Marketing
Channels

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.
1. The Nature and Importance of Marketing
Channels

“The greatest change will be in distribution channels, not

in new methods of production or consumption.”
(Peter Drucker)
In the United States, channel members collectively have
earned margins that account for 30 percent to 50 percent
of the ultimate selling price.

Marketing channels must not just serve markets,

they must also make markets.
 2
Number of Channel
Levels
2. Number of Channel Levels

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

 A zero-level channel, also

called a direct marketing
channel, consists of a
manufacturer selling directly
to the final customer.

 The major examples are door-

to-door sales, home parties,
mail order, telemarketing, TV
selling, Internet selling, and
manufacturer-owned stores.
Number of Channel Levels

 Indirect marketing
channel
Channel containing one or more
intermediary levels.
Number of Channel Levels

 Indirect marketing
channel:
 A one-level channel contains
one selling intermediary, such as
a retailer.
 A two-level channelcontains
two intermediaries. In consumer
markets, these are typically a
wholesaler and a retailer.
 A three-level channelcontains
three intermediaries.
For example, in the meatpacking
industry, wholesalers sell to
JOBBERS, essentially small-scale
wholesalers, who sell to small
1. Coca cola
2. Trà sữa -18
3. OU
4. BV Pháp Việt
5. Bất động sản đất xanh
6. Toyota
7. Bánh kinh đô
8. Bảo hiểm Prudential
9. Grab
10.Máy lạnh Panasonic
 3
Channel Systems
 3. Channel Systems

INTEGRATING
CONVENTIONAL VERTICAL HORIZONTAL
MULTICHANNEL
MARKETING MARKETING MARKETING
MARKETING
CHANNEL SYSTEM (VMS) SYSTEMS
SYSTEMS
 3. Channel Systems

INTEGRATIN
CONVENTIONAL VERTICAL HORIZONTA
G
MARKETING MARKETING L
MULTICHANN
CHANNEL SYSTEM (VMS) MARKETING
EL
SYSTEMS
MARKETING
 3. Channel Systems

 A conventional marketing channel consists of an

independent producer, wholesaler(s), and
retailer(s).
 Each is a separate business seeking to maximize its
own profits, even if this goal reduces profit for the
system as a whole.
CONVENTIONAL  No channel member has complete or substantial
MARKETING
control over other members.
CHANNEL
 3. Channel Systems

INTEGRATIN
CONVENTIONAL VERTICAL HORIZONTA
G
MARKETING MARKETING L
MULTICHANN
CHANNEL SYSTEM (VMS) MARKETING
EL
SYSTEMS
MARKETING
3. Channel Systems
 A vertical marketing system (VMS), includes the
producer, wholesaler(s), and retailer(s) acting as a
unified system.
 There are three types:

VERTICAL
MARKETING
SYSTEM (VMS)
CORPORATE VMS ADMINISTERED VMS CONTRACTUAL VMS
 3. Channel Systems
VERTICAL MARKETING SYSTEM (VMS)
 Corporate VMS
A vertical marketing system that combines successive stages
of production and distribution under single ownership - channel
leadership is established through common ownership.
 For example, the grocery giant Kroger owns and operates
40 manufacturing plants—18 dairies, 10 deli and bakery
plants, five grocery product plants, three beverage plants,
CORPORATE VMS two meat plants, and two cheese plants—that crank out 40
percent of the more than 14,000 private label items found
on its store shelves.
 3. Channel Systems
VERTICAL MARKETING SYSTEM (VMS)

 An administered VMS coordinates successive

stages of production and distribution through the
size and power of one of the members.
 For example, Kodak, Gillette, and Campbell Soup
command high levels of cooperation from their
ADMINISTERED VMS resellers in connection with displays, shelf space,
promotions, and price policies.
 3. Channel Systems
VERTICAL MARKETING SYSTEM (VMS)

 A contractual VMS consists of independent firms

at different levels of production and distribution
who join together through contracts to obtain more
economies or sales impact than each could
achieve alone.
 The franchise organization is the most common
CONTRACTUAL VMS
type of contractual relationship.
 3. Channel Systems
VERTICAL MARKETING SYSTEM (VMS)

 The franchise organization is the most common

type of contractual relationship
 There are three types of franchises:
❶ Manufacturer-sponsored retailer franchise system
❷ Manufacturer-sponsored wholesaler franchise
CONTRACTUAL VMS
system
 3. Channel Systems
VERTICAL MARKETING SYSTEM (VMS)

 The franchise organization is the most common

type of contractual relationship
 There are three types of franchises:
❶ Manufacturer-sponsored retailer franchise system:
For example, Ford and its network of independent
CONTRACTUAL VMS
franchised dealers.
 3. Channel Systems
VERTICAL MARKETING SYSTEM (VMS)

 The franchise organization is the most common type of

contractual relationship
 There are three types of franchises:
❷ Manufacturer-sponsored wholesaler franchise system
For example, Coca-Cola licenses bottlers (wholesalers) in
various markets who buy Coca-Cola syrup concentrate and then
CONTRACTUAL VMS
bottle and sell the finished product to retailers in local markets.
 3. Channel Systems
VERTICAL MARKETING SYSTEM (VMS)

 The franchise organization is the most

common type of contractual relationship
 There are three types of franchises:
❸ Service-firm-sponsored retailer franchise

CONTRACTUAL VMS system

For example, Burger King and its nearly 10,500
1. Coca cola,
2. Mac Donald
3. Thuốc lá Tobaco,
4. Vietinbank
5. Vissan
 3. Channel Systems

INTEGRATIN
CONVENTIONAL VERTICAL HORIZONTA
G
MARKETING MARKETING L
MULTICHANN
CHANNEL SYSTEM (VMS) MARKETING
EL
SYSTEMS
MARKETING
3. Channel Systems

Another channel development is the horizontal

marketing system, in which two or more unrelated
companies put together resources or programs to exploit
an emerging marketing opportunity.
HORIZONTA
L
MARKETING
SYSTEMS
3. Channel Systems

For example, many supermarket chains have

arrangements with local banks to offer in-store banking.
Citizens Bank has over 523 branches in supermarkets,
making up roughly 35 percent of its branch network.
Citizens’s staff members in these locations are more sales
HORIZONTA oriented, younger, and more likely to have some retail
L sales background than staff in the traditional brick-and-
MARKETING mortar branches.
SYSTEMS
 3. Channel Systems

INTEGRATING
CONVENTIONAL VERTICAL HORIZONTA
MULTICHANNEL
MARKETING MARKETING L
MARKETING
CHANNEL SYSTEM (VMS) MARKETING
SYSTEMS
SYSTEMS
3. Channel Systems
For example, Disney sells its DVDs through five main
channels:

 Disney Stores (now owned and run by The Children’s

Place)
 Movie rental stores such as Blockbuster.
INTEGRATING  Retail stores such as Best Buy, online retailers such as
MULTICHANNE Disney’s own online stores and [Link].
L MARKETING
 The Disney catalog.
SYSTEMS
 Other catalog sellers.
3. Channel Systems
Adding more channels gives companies three
important
Benefits:
❶ The first is increased market coverage.
❷ The second benefit is lower channel cost (selling
INTEGRATIN
G by phone is cheaper than personal selling to small
MULTICHANN customers).
EL ❸ The third is more customized selling (such as by
MARKETING
SYSTEMS adding a technical sales force to sell complex
1. ATM của Agribank tại Vincom
2. Sản phẩm DV của FPT
3. Iphone, macbook của Apple
4. The coffee house
5. Vinschool và Vin Uni của tập đoàn Vin group
 4
Channel Design
Decisions
4. Channel Design Decisions

Analyzing Setting Identifying Evaluating

Consumer Channel Major the Major
Needs Objectives Alternative Alternatives
s
4. Channel Design Decisions

Analyzing Setting Identifying Evaluating

Consumer Channel Major the Major
Needs Objectives Alternative Alternatives
s
4. Channel Design Decisions

When the company has defined its channel objectives,

it should next identify its major channel alternatives in terms
of…
The types of intermediaries

 The number of intermediaries

Identifying  The responsibilities of each channel
Major
Alternative member
s
 4. Channel Design Decisions
THE NUMBER OF INTERMEDIARIES
Three strategies based on the number of intermediaries are:

EXCLUSIVE SELECTIVE INTENSIVE

DISTRIBUTION DISTRIBUTION DISTRIBUTION
Identifying means severely limiting relies on only some of the places the goods or
Major the number of intermediaries willing to services in as many
Alternative intermediaries. carry a particular product. outlets as possible.
s Eg. Luxury automobiles Eg. Television and home Eg. Candy and
1. Starbucks
2. 2. Kinh đô (bánh mì)
3. 3. Xe Lexus
4. 4. Robot hut bụi Xiaomi
5. 5. Rolex

cho cô biết các thương hiệu sử dungj loại chiến lược lựa chọn số lượng
kênh phân phối nào?

vd: 1. intensive because ......

 5
Channel Management
Decisions
5. Channel Management Decisions

Selecting Managing Motivating Evaluating

channel channel channel channel
members members members members
 6
Channel conflict
6. Channel conflict

Channel conflict
Disagreement among marketing channel members on goals,
roles, and rewards - who should do what and for what rewards.
TYPES OF CONFLICT
 Horizontal channel conflict
 Vertical channel conflict
 Multichannel conflict
6. Channel conflict

TYPES OF CONFLICT

 Horizontal channel conflict: occurs between channel

members at the same level.
For example: Some Pizza Inn franchisees complained about
others cheating on ingredients, providing poor service, and
hurting the overall brand image.
6. Channel conflict

TYPES OF CONFLICT

 Vertical channel conflict: occurs between different levels

of the channel.
For example: Burger King has had a steady stream of
conflicts with its franchised dealers over everything from
increased ad spending and offensive ads to the prices it
charges for cheeseburgers.
6. Channel conflict

TYPES OF CONFLICT

 Multichannel conflict: exists when the manufacturer has

established two or more channels that sell to the same
market.
For example: When Goodyear began selling its popular tire
brands through Sears, Walmart, and Discount Tire, it angered
its independent dealers and eventually placated them by
offering exclusive tire models not sold in other retail outlets.
 6. Channel conflict
CAUSES OF CHANNEL CONFLICT MANAGING CHANNEL CONFLICT
 Strategic justification
 Dual compensation
 Goal incompatibility
 Superordinate goals
 Unclear roles and rights  Employee exchange
 Differences in perception  Joint memberships
 Intermediaries’ dependence on  Co-optation
 Diplomacy, mediation, or
the manufacturer
arbitration
 Legal recourse
 6
Marketing Logistics
7. 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.
7. Marketing Logistics

Marketing logistics involves:

 Outbound distribution: moving products from the
factory to resellers and consumers.
 Inbound distribution: moving products and materials
from suppliers to the factory.
 Reverse distribution: moving broken, unwanted, or
excess products returned by consumers or resellers.
7. Marketing Logistics
What is the importance of logistics?
Their responses should include:
 Competitive advantage by giving customers better
service at lower prices.
 Cost savings to the company and its customers.
 Product variety requires improved logistics.
 Information technology has created opportunities for
distribution efficiency.
7. Marketing Logistics

Goals of the Logistics System

“getting the right goods to the right places

at the right time for the least cost”
7. Marketing Logistics

Supply chain management is the process of

managing upstream and downstream value-added flows
of materials, final goods, and related information among
suppliers, the company, resellers, and final consumers.
7. Marketing Logistics
Supply chain management
 Major
Logistics
Functions
What do you need to
remember?
 Product: is a good or Price: is the amount
service that satisfies the of money customers
wants of a company’s must pay to obtain
target market. the product.

PRODUCT Marketin PRICE

g Mix
(4Ps)

Promotion: is defined Place: includes

as the activities that company activities
communicate the merits that make a
PROMOTION PLACE product available
of the product and
persuade target to target
customers to buy it. consumers.
 Product: is a good or Price: is the amount
service that satisfies the of money customers
wants of a company’s must pay to obtain
target market. the product.

PRODUCT Marketin PRICE

g Mix
(4Ps)

Promotion: is defined Place: includes

as the activities that company activities
communicate the merits that make a
PROMOTION PLACE product available
of the product and
persuade target to target
customers to buy it. consumers.
4Ps (seller’s mind- (buyer’s mind-set) 4Cs
set)
Customers are buying value
Businesses sell products and solutions to problems
PRODUCT CUSTOMER VALUE

Customer refers to the total

Price costs of obtaining, using,
and disposing of a product
PRICE CUSTOMER COSTS

Activities that make a product

Easy to buying
available to target consumers.
PLACE CONVENIENCE

Consumers want two-way

Eg. 30 second
communication and
commercials on
relationships with
television and/or radio
businesses
PROMOTION COMMUNICATION
4Ps (seller’s mind- (buyer’s mind-set) 4Cs
set)
Customers are buying value
Businesses sell products and solutions to problems
PRODUCT CUSTOMER VALUE

Customer refers to the total

Price costs of obtaining, using,
and disposing of a product
PRICE CUSTOMER COSTS

Activities that make a product

Easy to buying
available to target consumers.
PLACE CONVENIENCE

Consumers want two-way

Eg. 30 second
communication and
commercials on
relationships with
television and/or radio
businesses
PROMOTION COMMUNICATION
Number of Channel Levels
 Channel Systems

INTEGRATIN
CONVENTIONAL VERTICAL HORIZONTA
G
MARKETING MARKETING L
MULTICHANN
CHANNEL SYSTEM (VMS) MARKETING
EL
SYSTEMS
MARKETING
Channel Systems

 A vertical marketing system (VMS), includes the

producer, wholesaler(s), and retailer(s) acting as a
unified system.
 There are three types:

VERTICAL
MARKETING
SYSTEM (VMS)
CORPORATE VMS ADMINISTERED VMS CONTRACTUAL VMS
Channel Design Decisions

Analyzing Setting Identifying Evaluating

Consumer Channel Major the Major
Needs Objectives Alternative Alternatives
s
 Channel Design Decisions

THE NUMBER OF INTERMEDIARIES

Three strategies based on the number of intermediaries are:

EXCLUSIVE SELECTIVE INTENSIVE

DISTRIBUTION DISTRIBUTION DISTRIBUTION
Identifying means severely limiting relies on only some of the places the goods or
Major the number of intermediaries willing to services in as many
Alternative intermediaries. carry a particular product. outlets as possible.
s Eg. Luxury automobiles Eg. Television and home Eg. Candy and
Channel conflict

Channel conflict
Disagreement among marketing channel members on goals,
roles, and rewards - who should do what and for what rewards.
TYPES OF CONFLICT
 Horizontal channel conflict
 Vertical channel conflict
 Multichannel conflict
Marketing Logistics

Goals of the Logistics System

“getting the right goods to the right places

at the right time for the least cost”
 Major
Logistics
Functions