www.mhhe.com/fourps

Place and Development of Channel Systems

Place and Development of Channel Systems

For use only withPerreault/Cannon/McCarthy or Perreault/McCarthy texts.© 2008 McGraw-Hill Companies, Inc.McGraw-Hill/Irwin

CHAPTER TEN

CH 12: Retailers, CH 12: Retailers, Wholesalers & Their Wholesalers & Their Strategy Planning Strategy Planning

Place Place objectivesobjectives•Product Product classclass•Product life Product life cyclecycle

Direct vs. Direct vs. indirectindirect•Differences Differences between between •When to useWhen to use

Channel Channel specialistsspecialists•Discrepancies Discrepancies & assortments& assortments•Regrouping Regrouping activitiesactivities

Channel Channel relationshipsrelationships•Implementing Implementing strategystrategy•Vertical Vertical marketing marketing systemsystem

CH 11: Distribution CH 11: Distribution Customer Service & Customer Service & LogisticsLogistics

CH 10: Place and CH 10: Place and Development of Development of Channel SystemsChannel Systems

Market Market exposureexposure•IntensiveIntensive•SelectiveSelective•exclusiveexclusive

Marketing Strategy Planning for Place (Exhibit 10-1)

KeyIssuesKey

Issues

Place Decisions Are Guided by “Ideal” Place Objectives

ProductClassesSuggest

Objectives

ProductClassesSuggest

Objectives

PlaceSystemIs Not

Automatic

PlaceSystemIs Not

Automatic

DecisionsHave

Long-run Effects

DecisionsHave

Long-run Effects

Internet Makes Direct Distribution Easier

Internet Makes Direct Distribution Easier

Internet Makes Direct Distribution Easier

Internet Makes Direct Distribution Easier

Greater ControlGreater Control

Lower CostLower Cost

Direct Contact with Customer Needs

Direct Contact with Customer Needs

Quicker Response or Change in Marketing Mix

Quicker Response or Change in Marketing Mix

Greater ControlGreater Control

Lower CostLower Cost

Direct Contact with Customer Needs

Direct Contact with Customer Needs

Quicker Response or Change in Marketing Mix

Quicker Response or Change in Marketing Mix

Suitable Middlemen Not Available

Suitable Middlemen Not Available

Channel System May Be Direct or Indirect

SomeSomeReasonsReasonsFor ChoosingFor ChoosingDirect ChannelsDirect Channels

Direct Channels Are Common with Business Customers and Services

When Indirect Channels Are Best

The UK’s leading supermarket

chain wanted to provide the

freshest food possible in the

most environmentally

friendly way. Who did Tesco turn to

for help?

Channel Specialists May Reduce Discrepancies and Separations

A Discrepancy of Assortment

SortingSortingSortingSorting

Bulk-BreakingBulk-BreakingBulk-BreakingBulk-BreakingAccumulatingAccumulatingAccumulatingAccumulating

Channel Specialists Adjust Discrepancies with Regrouping Activities

AssortingAssorting

Role of Channel CaptainRole of Channel Captain

Conflict HandlingConflict HandlingConflict HandlingConflict Handling

Whole-Channel Product-Market Commitment

Whole-Channel Product-Market Commitment

Whole-Channel Product-Market Commitment

Whole-Channel Product-Market Commitment

Choosing the Type of Relationship

Choosing the Type of Relationship

Choosing the Type of Relationship

Choosing the Type of Relationship

Channel Relationship Must Be Managed

KeyIssues InChannel

Management

KeyIssues InChannel

Management

Producers or Middlemen May Be Channel Captains (Exhibit 10-2)

Vertical Marketing Systems Focus on Final Customers

Fairly goodto good

Contracts

McDonald’s

Complete

One company

ownership

Sherwin-williams

Some to good

Economic power and leadership

General Electric

Characteristics

Type of channel

Little ornone

None

Typical “inde-

pendents”

Amount of cooperation

TraditionalVertical marketing systems

Administered Contractual Corporate

Control maintained by

Examples

IntensiveIntensive

SelectiveSelective

IntensiveIntensive

SelectiveSelective

The Best Channel System Should Achieve Ideal Market Exposure

= number ofoutletsExclusiveExclusive

MarketExposureStrategies

MarketExposureStrategies

RetailerRetailer RetailerRetailer RetailerRetailer

Horizontal Arrangements Are Illegal

Limiting Market Exposure

RetailerRetailer RetailerRetailer

ProducerProducer

VerticalArrangementsMay Be Legal WholesalerWholesaler

Channel Systems Can Be Complex (Exhibit 10-4)

• Place

• Channel of distribution

• Direct marketing

• Discrepancy of quantity

• Discrepancy of assortment

• Regrouping activities

• Accumulating

• Bulk-breaking

• Sorting

• Assorting• Traditional channel

systems• Channel captain• Vertical marketing

systems• Corporate channel

systems• Vertical integration• Administered

channel systems• Contractual channel

systems

Key Terms

• Ideal market exposure

• Intensive distribution

• Selective distribution

• Exclusive distribution

• Multichannel distribution

• Reverse channels

Key Terms