?2000 Prentice Hall
Objectives
? Work Performed by Marketing Channels
? Channel-Design Decisions
? Channel-Management Decisions
? Channel Dynamics
?2000 Prentice Hall
How a Distributor Reduces the
Number of Channel Transactions
= Customer = Manufacturer
A,Number of contacts without a distributor
M x C = 3 X 3 = 9
1
3 2
4 5
6
7 8
9
?2000 Prentice Hall
How a Distributor Reduces the
Number of Channel Transactions
= Distributor = Customer = Manufacturer
B,Number of contacts with a distributor
M x C = 3 + 3 = 6 Store
1
2
3
4
5
6
?2000 Prentice Hall
Distribution Channel Functions
Ordering
Payments
Communication Transfer
Negotiation
Financing Risk Taking
Physical
Distribution
Information
?2000 Prentice Hall
Customers’ Desired Service Levels
? Lot size
? Waiting time
? Spatial convenience
? Product variety
? Service backup
?2000 Prentice Hall
Channel Management Decisions
Selecting
FEED
BA
CK
Motivating
Training
Evaluating
?2000 Prentice Hall
Types of Vertical Marketing Systems
Corporate
Common Ownership at Different
Levels of the Channel
Contractual
Contractual Agreement Among
Channel Members
Administered
Leadership is Assumed by One or
a Few Dominant Members
?2000 Prentice Hall
Conventional Distribution Channel vs,
Vertical Marketing Systems
Vertical
marketing channel
Manufacturer
Retailer
Conventional
marketing channel
Consumer
Manufacturer
Consumer
Retailer
Wholesaler
W
ho
les
ale
r
?2000 Prentice Hall
Causes of Channel
Conflict
? Incompatibility
? Difference in Perception
? Dependence
Legal & Ethical Issues in
Channel Relations
? Exclusive Dealing
? Exclusive Territories
? Tying Agreements
? Dealers’ Rights