MARKETING MANAGEMENT14th edition

15 Designing and

Managing Integrated Marketing Channels

Kotler Keller

How a Marketing Intermediary Reduces the Number of Channel Transactions

CHPT: 15&16-2

ContactContact

FinancingFinancing

InformationInformationRisk TakingRisk Taking

PromotionPromotion

MatchingMatchingNegotiationNegotiation

PhysicalDistribution

PhysicalDistribution

These Functions Should be Assigned to the Channel Member Who Can Perform Them Most Efficiently and Effectively to Provide Satisfactory Assortments of Goods and Services to

Target Customers.

Distribution Channel Functions

CHPT: 15&16-3

MM WW JJ RR CC

MM WW RR CC

MM RR CC

MM CC

Channel 1

Channel 2

Channel 3

Channel 4

Channel Level - Each Layer of Marketing Intermediaries that Perform Some Work in Bringing the Product and its

Ownership Closer to the Final Buyer.

Number of Channel Levels

Direct Channel

Indirect Channel

CHPT: 15&16-4

Channel Behavior & Conflict

• The channel will be most effective when:– each member is assigned tasks it can do best.– all members cooperate to attain overall channel goals

and satisfy the target market.

• When this doesn’t happen, conflict occurs:– Horizontal Conflict occurs among firms at the same

level of the channel, i.e retailer to retailer.– Vertical Conflict occurs between different levels of the

same channel, i.e. wholesaler to retailer.

• For the channel to perform well, each channel member’s role must be specified and conflict must be managed.

CHPT: 15&16-5

Conventional Marketing Channel vs. Vertical Marketing System

Conventional Marketing Channel

Vertical MarketingSystem

Manufacturer

Retailer

Manufacturer

Retailer

Wh

ole

sale

rW

hole

sale

rManufacturer

Wholesaler

Retailer

Consumer ConsumerCHPT: 15&16-6

CorporateCommon Ownership at Different Levels of the Channel i.e. Sears

ContractualContractual Agreements Among

Channel Members

AdministeredLeadership is Assumed by One or

a Few Dominant Members i.e. Kraft

Degree of

Direct Control

Types of Vertical Marketing Systems

CHPT: 15&16-7

ContractualVMS

ContractualVMS

RetailerCooperatives

RetailerCooperatives

FranchiseOrganizations

FranchiseOrganizations

Wholesaler SponsoredVoluntary Chain

Wholesaler SponsoredVoluntary Chain

Service-Firm-Sponsored

Franchise System

Service-Firm-Sponsored

Franchise System

Manufacturer-Sponsored Wholesaler

Franchise System

Manufacturer-Sponsored Wholesaler

Franchise System

Manufacturer-Sponsored RetailerFranchise System

Manufacturer-Sponsored RetailerFranchise System

Vertical Marketing Systems (VMS)

Vertical Marketing Systems (VMS)

CorporateVMS

CorporateVMS

AdministeredVMS

AdministeredVMS

Types of Vertical Marketing Systems

CHPT: 15&16-8

Analyzing Consumer Service Needs

Setting Channel Objectives & Constraints

ExclusiveDistribution

SelectiveDistribution

IntensiveDistribution

Identifying Major Alternatives

Evaluating the Major Alternatives

Designing International Distribution Channels

Channel Design Decisions

CHPT: 15&16-9

MARKETING MANAGEMENT14th edition

16 Managing Retailing

and Wholesaling

Kotler Keller

What is Retailing?

Includes all the activities Involved in Selling Goods or Services Directly to Final Consumers for Their Personal, Nonbusiness Use.

CHPT: 15&16-11

Retailing

• Retailing can be done in stores (store retailing) or out of a store (nonstore retailing) such as:

– Direct mail,– Catalogs,– Telephone,– Home shopping shows, – Internet.

CHPT: 15&16-12

Amount of Service

Self-Service, Limited-Service andFull-Service Retailer

Amount of Service

Self-Service, Limited-Service andFull-Service Retailer

Product LineLength and Breadth of the Product

Assortment

Product LineLength and Breadth of the Product

Assortment

Relative PricesPricing Structure that is Used

by the Retailer

Relative PricesPricing Structure that is Used

by the Retailer

Retail OrganizationsIndependent, Corporate, or

ContractualOwnership Organization

Classification of Retailing

CHPT: 15&16-13

Self-Service Self-Service RetailerRetailer

Provide Few or No Services to Shoppersi.e. Migros

Limited-ServiceLimited-ServiceRetailersRetailers

Provide Only a Limited Number of Services

to Shoppers i.e. ÇarşıFull-ServiceFull-Service

RetailersRetailers

Retailers that Provide a Full Range of Services

to Shoppersi.e. Arçelik

Classification of Retailing:Amount of Service

CHPT: 15&16-14

Specialty Stores

Department Stores

Supermarkets

Convenience Stores

Superstores

Discount Stores

Narrow Product Line, Deep Assortment i.e.

Deriden, TimberlandWide Variety of Product Lines i.e. Clothing,

Yeni Karamürsel, ÇarşıWide Variety of Food, Laundry, & Household Products i.e. Canerler

Limited Line of High-Turnover Convenience Goods i.e. Büfeler,

bakkallarLarge Assortment of Routinely Purchased Food & Nonfood Products

i.e. Real, MigrosStandard Merchandise at Lower Prices

i.e. Ulus, Kızılay mağazaları

Off-Price Retailers Changing Collection of Higher-Quality Goods at a Reduced Price i.e. Outlet

Warehouse ClubsLimited Selection of Brand-Name

Grocery Items, Appliances, Etc. i.e. Metro

Classification of Retailing:Product Line

Store Description

CHPT: 15&16-15

Leased (Tepe Home)

Franchise (North Shield)

IndependentRetailers

Membership Group (Fabrika, Çarşı, Network. Beymen)

Classification of Retailing:Retail Organization

Corporate Chain(TGI)

CHPT: 15&16-16