Set of interdependent organizations networked together to make the product or services available

Distribution Decisions

Marketing channel: A set of interdependent organizations involved in the process of making a product or service available for use or consumption.

Functions Information: Collection and dissemination of marketing research information in the marketing environment. Promotion: The development and spread of persuasive communications about the offer to customers. Negotiation: The effort to reach final agreement on price and other terms ease the transfer of ownership or possession. Ordering: The backward communication of intentions to buy by the marketing- channel members to the manufacturer.

Financing: The collection and allocation of funds required to finance inventories at different levels of the marketing channel. Risk taking: The assumption of risks related with carrying out the channel work. Physical possession : The successive storage and movement of physical goods from raw materials to the final customers. Payment: Buyers’ payment of their bills through financial institutions. Title: The transfer of ownership from an organization or a person to another. Functions [ continued … ]

Types of Intermediaries: Agent Middleman Wholesaler Retailers

Channel Alternatives Consumer product

Industrial product

Distribution Decisions Multiple متعددة Channel International الدولية Distribution – Export تصدير – Contractual عقد Agreement – Direct مباشرة Investment Channel for Services

Channel Design Decisions

Evaluating تقييم Major Channel Alternatives » Economic الاقتصادية criteria » Control criteria » Need for flexibility المرونة

Factors influencing selection حدد of Channel Members » Number of years in business » Product lines carried » Growth النمو » Profit record » Solvency الملاءة » Cooperativeness التعاون » Reputation بائع » Quality of sales force » Stores locations المكان » Future growth potential إمكانات النمو في المستقبل

Evaluate تقييم Channel Members Sales quota achievement Average inventory level Customer delivery time Action on damaged goods and lost goods Cooperation in promotional and training programs Modify تعديل Channel Arrangements Changes in consumer spending pattern, market grow, innovative distribution channels exist End

Marketing channel: a set of interdependent organizations that help make a product or service available foruse or consumption by the consumer or business user.Channel level: a layer of intermediaries that performs some work in bringing the product and its ownershipcloser to the final buyer.Direct marketing channel: a marketing channel that has no intermediary levels, company sells directly toconsumers (ex. Amway).Indirect marketing channel: channel containing one or more intermediary levels.Channel conflict: disagreement among marketing channel members on goals, roles, and rewards—whoshould do what and for what rewards;Horizontal conflict—occurs among firms at the same level of thechannel;Vertical conflict—conflicts between different levels of the same channel, more common.VerticalMarketing system (VMS): a distribution channel structure in which producers, wholesalers, and retailersact as a unified system, one channel member owns the others, has contracts with the, or has so much powerthat they all cooperate.conventional distribution channel—a channel consisting of one or more independent producers,wholesalers, and retailers, each a separate business seeking to maximize its own profits, even at the expenseof profits for the system as a whole.Corporate VMS: a vertical marketing system that combines successive stages of production anddistribution under single ownership—channel leadership is established through common ownership.Contractual VMS:a vertical marketing system in which independent firms at different levels of productionand distribution join together through contracts to obtain more economies or sales impact than they couldachieve alone.Franchise organization: a contractual vertical marketing system in which a channel member, called afranchisor, links several stages in the production-distribution process.Administered VMS: a vertical marketing system that coordinates successive stages of production anddistribution, not through common ownership or contractual ties, but through the size and power of one of theparties.Horizontal marketing system: a channel arrangement in which two or more companies at one level jointogether to follow a new marketing opportunity.Multichannel distribution system: a distribution system in which a single firm sets up two or moremarketing channels to reach one or more customer segments.Disintermediation: the cutting out of marketing channel intermediaries by product or service producers, orthe displacement of traditional resellers by radical new types of intermediaries.Marketing channel design: designing effective marketing channels by analyzing consumer needs, settingchannel objectives, identifying major channel alternatives, and evaluating them.

- a set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user Marketing channel design- designing effective marketing channels by analyzing consumer needs, setting channel objectives, identifying major channel alternatives, and evaluating themMarketing channel management- selecting, managing, and motivating individual channel members and evaluating their performance over timeMarketing logistics (physical distribution)- planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to points of consumption to meet customers requirements at a profitMultichannel distribution system- a distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segmentsSelective distribution- the use of more than one, but fewer than all, of the intermediaries who are willing to carry the company’s products Supply chain management- managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumersThird-party logistics (3PL) provider- an independent logistics provider that performs any or all of the function required to get its client’s product to market Value delivery network- the network made up of the company, suppliers, distributors, and ultimately customers who “partner” with each other to improve the performance of the entire system in delivering customer valueVertical marketing system (VMS)- a distribution channel structure in which producers, wholesalers, and retailers act as a unified system. One channel member owns the others, has contracts with them, or has so much power that they all cooperateChapter 11Agent- a wholesaler who represents buyers or sellers on a relatively permanent basis, performs only a few functions, and does not take title to goodsBroker- a wholesaler who does not take title to goods and whose function is to bring buyers and sellers together and assist in negotiation