l8 distribution
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Distribution
March 03, 2010
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Chapter1414
McGraw-Hill/Irwin ©2007 by the McGraw-Hill Companies, Inc. All rights reserved.
Channels of Distribution
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Marketing channelsMarketing channels
Marketing Channels are sets of interdependent organizations involved in the process of making a product available for use or consumption.
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MiddlemenMiddlemen
MiddlemenMiddlemen A business firm thatrenders services directly
related to the sale/purchaseof a product as it flows through
from producer to consumer
A business firm thatrenders services directly
related to the sale/purchaseof a product as it flows through
from producer to consumer
You can eliminate middlemen, but not the essential distribution activities they
perform
You can eliminate middlemen, but not the essential distribution activities they
perform
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Middleman ActivitiesMiddleman Activities
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Middleman ActivitiesMiddleman Activities
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Distribution ChannelsDistribution Channels
DISTRIBUTION CHANNELS
People and firms involvedin the transfer of title to a product
as the product moves from producer to ultimate consumer or business user
DISTRIBUTION CHANNELS
People and firms involvedin the transfer of title to a product
as the product moves from producer to ultimate consumer or business user
Producers Middlemen
Final Consumer
OrBusiness
User
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Major Channels of DistributionMajor Channels of Distribution
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Vertical Marketing SystemsVertical Marketing Systems
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Choice of Channels: MarketChoice of Channels: Market
Type of
Market
Geographic concentration
Number ofpotential
customers
Ordersize
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Choice of Channels: MiddlemanChoice of Channels: Middleman
Services provided by middlemen
Services provided by middlemen
Availability of desired middlemen
Availability of desired middlemen
Producer’s and middlemen’s policies
Producer’s and middlemen’s policies
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Choice of Channels: CompanyChoice of Channels: Company
Desire for channel control
Services provided by seller
Ability of management
Financial resources
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Intensity of DistributionIntensity of Distribution
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Conflict in ChannelsConflict in Channels
HorizontalHorizontal
Middlemen of the same type
Middlemen of the same type
Different types of middlemen
on the same level
Different types of middlemen
on the same level
RetailerRetailer Retailer Retailer
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Conflict in ChannelsConflict in Channels
VerticalVertical
Producervs.
Wholesaler
Producervs.
Retailers
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Who Controls the Channels?Who Controls the Channels?
Expertise
Sanctions
Rewards
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Channel as PartnershipChannel as Partnership
Cooperation Collaboration
RelationshipMarketing
Coordination
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Legal ConsiderationsLegal Considerations
Exclusivedealing
Tyingcontracts
Refusalto deal
Exclusiveterritory