MANAGING MARKETING CHANNELS OF DISTRIBUTION AND

LOGISTICS

Professor Chip BesioCox School of BusinessSouthern Methodist University

The variety of terms used for marketing intermediaries that vary in use in consumer and business markets

Intermediaries minimize transactions and the cost of distribution for producers and customers

NATURE AND IMPORTANCE OF MARKETING CHANNELS

THE VALUE CREATED BY INTERMEDIARIES

Marketing Channel

Functions Performed by Intermediaries

• Transactional Function• Logistical Function

• Facilitating Function

Utilities Received by Consumers

Marketing channel intermediaries perform three functions, each consisting of different activities

Common marketing channels for consumer offerings by the kind and number of intermediaries

Common marketing channels for business offerings by the kind and number of intermediaries

One Telecom Company’s Consumer Market Channels

CUSTOMERACQUISITION

BusinessOffice

Smart Moves

Newcomer

Agents

CUSTOMERDEVELOPMENT

Best CustomerCenters

RSC Service Upselling

Direct Mail

OutboundTelemarketin

g

Welcome Package

Directory

MASSMEDIA

AdvertisingResponse

TV

Radio

Print

Specialty

MAILBOXMARKETING

DirectMail

Catalog

Internet

FACE TOFACE

RetailStores

Express Kiosks

NationalRetailers

Local Agents

Direct Sales

LIFESTYLEINTERCEPT

Military

Campus

Retirement

Kids Away

EventMarketin

g

On the Move

AFFINITY

Employee/Employer

Associations

Co-MarketingPartners

CHANNEL STRUCTURE & ORGANIZATIONELECTRONIC & DIRECT MARKETING CHANNELS;

MULTICHANNEL MARKETING

Electronic Marketing Channels

Direct Marketing Channels

Multichannel Marketing

Consumer electronic marketing channels are similar to those for consumer and business offerings

CHANNEL STRUCTURE & ORGANIZATIONDUAL DISTRIBUTION &

STRATEGIC CHANNEL ALLIANCES

Dual Distribution

Strategic Channel Alliances

HELP YOUR CHILD FEEL BETTER WITH TRIAMINIC® PRODUCTS AND A REDBOX

MOVIE RENTAL

1. Customers demand it.2. Market access.3. Lower marketing and selling expenses.4. Distributors perform necessary functions.5. Reduced collection problems.

The Top FiveReasons for Selling Through Distributors

Functions performed by independent wholesaler types

GOING ONLINEVisit an Apple Store to See

What All the Excitement is About

Three types of vertical marketing systems: corporate, contractual (most popular), and administered

McDonalds and H&R BlockWhat vertical marketing system does each use?

CHANNEL CHOICE AND MANAGEMENTFACTORS AFFECTING CHANNEL CHOICE

Environmental Factors

Consumer Factors

Product Factors

Company Factors

CHANNEL CHOICE AND MANAGEMENTCHANNEL CHOICE CONSIDERATIONS

Target Market Coverage

• Intensive Distribution

• Exclusive Distribution

• Selective Distribution

CHANNEL CHOICE AND MANAGEMENTCHANNEL CHOICE CONSIDERATIONS

Profitability

• Margins Earned

• Channel Costs

Global Dimensions of Marketing Channels

USING MARKETING DASHBOARDSChannel Sales and Profit at

Charlesburg Furniture

CHANNEL CHOICE AND MANAGEMENTCHANNEL RELATIONSHIPS

Sources of Channel Conflict

• Vertical Conflict

• Disintermediation

• Horizontal Conflict

CHANNEL CHOICE AND MANAGEMENTCHANNEL RELATIONSHIPS

Legal Considerations

•Dual Distribution

•Vertical Integration

•Exclusive Dealing

•Tying Arrangements

•Refusal to Deal

•Resale Restrictions

The Clayton Act and Sherman Act place legal restrictions on specific marketing channel strategies and practices