Marketing channel system

Marketing channel system
Kotler on Marketing
Establish channels for different target markets and aim for efficiency, control, and adaptability.
Marketing Channel system
Distribution ? powerful element of marketing mix
Distribution ? process of getting the product from the producer to the customer.
The use of intermediaries results from their greater efficiency in making goods available to target markets.
Selling through wholesalers and retailers usually is much more efficient and cost effective than direct sales
Offer the firm more than it can achieve on it?s own through the intermediaries
Scale of operation.
Purpose: Match supply from producers to demand from consumers.
What is a Distribution Channel?
A set of interdependent organizations (intermediaries) involved in the process of making a product or service available for use or consumption by the consumer or business user.
Used to move the customer towards the produc
What Work is Performed by Marketing Channels?
Acquire funds to finance inventories at different levels in the marketing channel
Assume risk connected with carrying out channel work
Provide for the successive storage and movement of physical products
Provide for buyers? payment of their bills through banks and other financial institutions
Oversee actual transfer of ownership from one organization or person to another
Channel Management
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. retailer to wholesaler
For the channel to perform well, conflict must be managed.
Causes of Channel Conflict
Difference in Perception
Channel Management Decisions
Channel-Design Decisions
Push strategy
Pull strategy
Designing a channel system involves four steps:
Analyzing customer needs
Establishing channel objectives
Identifying major channel alternatives
Evaluating major channel alternatives
Channel-Design Decisions
Establish Objectives and Constraints
Identify Major Channel Alternatives
Types of Intermediaries
Number of Intermediaries
Exclusive distribution
Exclusive dealing
Selective distribution
Intensive distribution
Channel-Design Decisions
Terms and Responsibilities of Channel Members
Price policy
Conditions of sale
Distributors? territorial rights
Evaluate the Major Alternatives
Economic Criteria
Channel Behavior
Channel members are dependent upon one another and must work together for the channel to operate successfully
Members should understand and accept their roles, coordinate their goals and activities, and cooperate to attain overall channel goals




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