what do you think? i.what does marketing channels mean? ii.what do marketing channels do? iii.what...
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What do you think?
I. What does marketing channels mean?
II. What do marketing channels do?
III.What are the important changes in marketing channels?
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Ch. 1Marketing Channels:
Structure and Functions
Key Topics:1.Economic Rationales for marketing channels
2.Functions and Flows in Marketing Channels
3.How would you study marketing channels?
4.Service output demand
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Marketing Channels
Originally defined as: Paths through which goods or materials can move from producers to users.
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Middleman or Intermediaries
create value by reducing the spatial separation – the physical distance between the point of production and point of consumption
©McGraw-Hill Companies, Inc. 2002
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Ch. 1 - 1Marketing Channels: Overview
I. Introduction
• - Definition: A set of interdependent organizations involved in the process of making a product of service available for consumption or use.*
• - Four Types of Utility: Form, Time, Place, and Possession utility
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Marketing Channels Act as Exchange Facilitators
We define a Marketing Channel as exchange relationships that create customer value in the acquisition, consumption, and disposition of products and services
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Ch 1-2The Economic Rationales for Marketing Channels
• A. The Efficiency Rationale for Intermediaries (Figure 1-1)
• B. The Discrepancy of Assortment and Sorting
• C. Routinization
• D. Searching
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Selling Directly
Manufacturers
Retailers
40 Contact Lines
FIGURE 1.1: CONTACT COSTS TO REACH THE MARKET WITH AND WITHOUT INTERMEDIARIES
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Selling Through One Wholesaler
Manufacturers
Wholesaler
Retailers
14 Contact Lines
FIGURE 1.1: CONTACT COSTS TO REACH THE MARKET WITH AND WITHOUT INTERMEDIARIES
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Selling Through Two Wholesalers
Manufacturers
Wholesalers
Retailers
28 Contact Lines
FIGURE 1.1: CONTACT COSTS TO REACH THE MARKET WITH AND WITHOUT INTERMEDIARIES
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FIGURE 1-1: CONTACT COSTS TO REACH THE MARKET WITH AND WITHOUT INTERMEDIARIES
Selling Directly
Manufacturers
Retailers
40 Contact Lines
Selling Through One WholesalerManufacturers
Wholesaler
Retailers 14 Contact Lines
Selling Through Two WholesalersManufacturers
Wholesalers
Retailers
28 Contact Lines
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Ch. 1-3Functions and Flows in Marketing Channels*
A. Functions in Marketing Channels– Carrying of Inventory
– Demand generation
– Physical distribution
– After-sale service
– Extending credit to customers
B. Flows in Marketing Channels (Figure 1-2)- Physical Possession - Ownership
- Promotion - Negotiation
- Financing - Risking
- Ordering - Payment
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Physical PossessionOwnership
Promotion
Negotiation
Financing
Risking
Ordering
Payment
Physical PossessionOwnership
Promotion
Negotiation
Financing
Risking
Ordering
Payment
Physical PossessionOwnership
Promotion
Negotiation
Financing
Risking
Ordering
Payment
FIGURE 1.2: MARKETING FLOWS IN CHANNELS
Producers Wholesalers Retailers
ConsumersIndustrial
and Household
Commercial Channel Subsystem
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Ch 1-4Analyzing Marketing Channel Structures
• A. Channels as a Network of Systems - Interdependent and Interrelated systems
- Open systems
• B. Service Outputs as Determinants of
Channel Structure - Spatial Convenience
- Lot size
- Waiting or delivery time - Product variety and assortment
- Customer Service
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Ch 1-4Analyzing Marketing Channel Structures (Cont’d)
C. Marketing Cost as a Determinant
D. Additional Driving Factors: Technological,
Cultural, Geographic, and Social
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FIGURE 1-3: FRAMEWORK FOR CHANNEL DESIGN AND IMPLEMENTATION
INSIGHTS FOR SPECIFIC CHANNEL INSTITUTIONS:Retailing, Wholesaling and Logistics, Franchising
Channel Design Process:
SEGMENTATION: Recognize and respond to target customers’ service output demands
Decisions AboutEfficient Channel Response:
CHANNEL STRUCTURE: What kinds of intermediaries are in my channel? Who are they? How many of them?SPLITTING THE WORKLOAD: With what responsibilities?DEGREE OF COMMITMENT: Distribution alliance? Vertical integration/ownership?GAP ANALYSIS: What do I have to change?
Channel Management Process:
CHANNEL CONFLICT:Identify actual and potential
sources
MANAGE/DEFUSE CONFLICT:
Use power sources strategically, subject to legal constraints
GOAL: Channel Coordination
CHANNEL POWER:Identify sources for all
channel members
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FIGURE 1-4: ORGANIZATION OF THE TEXT
Channel DesignProcess:
SEGMENTATION: Chapter 2
Decisions About
Efficient Channel Response:
CHANNEL STRUCTURE:Chapter 4
SPLITTING THE WORKLOAD:Chapter 3
DEGREE OF COMMITMENT:Chapters 8, 9
GAP ANALYSIS: Chapter 5
Channel ManagementProcess:
CHANNEL CONFLICT:Chapter 7
MANAGE/DEFUSE CONFLICT:
Chapters 6, 7, 8, 9, 10
GOAL: Channel Coordination
CHANNEL POWER:Chapter 6
INSIGHTS FOR SPECIFIC CHANNEL INSTITUTIONS:Chapters 11, 12, 13