Distribution Channels and Logistics Management

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Distribution Channels and Logistics Management
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How a Marketing Intermediary Reduces the Number
of Channel Transactions
3
Distribution Channel Functions
Risk Taking
These Functions Should be Assigned to the Channel
Member Who Can Perform Them Most Efficiently and
Effectively to Provide Satisfactory Assortments
of Goods and Services to Target Customers.
Information
Financing
Promotion
Contact
Physical Distribution
Matching
Negotiation
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Number of Channel Levels
Channel Level - Each Layer of Marketing
Intermediaries that Perform Some Work in Bringing
the Product and its Ownership Closer to the Final
Buyer.
M
C
Channel 1
Direct Channel
M
R
C
Indirect Channel
Channel 2
M
W
R
C
Channel 3
M
W
J
R
C
Channel 4
5
Channel Behavior Conflict

• 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 doesnt 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. wholesaler to retailer.
• For the channel to perform well, each channel
  members role must be specified and conflict must
  be managed.

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Conventional Marketing Channel vs. a Vertical
Marketing System
Conventional Marketing Channel
Vertical Marketing System
Manufacturer
Manufacturer Retailer
Wholesaler
Wholesaler
Retailer
Consumer
Consumer
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Types of Vertical Marketing Systems
Corporate Common Ownership at Different Levels
of the Channel i.e. Sears
Contractual Contractual Agreements Among Channel
Members
Administered Leadership is Assumed by One or a
Few Dominant Members i.e. Kraft
Degree of Direct Control
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Types of Vertical Marketing Systems
Vertical Marketing Systems (VMS)
Administered VMS
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Channel Design Decisions
Analyzing Consumer Service Needs
Setting Channel Objectives Constraints
Identifying Major Alternatives
Evaluating the Major Alternatives
Designing International Distribution Channels
Exclusive Distribution
Intensive Distribution
Selective Distribution
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What is Retailing?


Retailing
Includes all the activities Involved
in Selling Goods or Services Directly to Final
Consumers for Their Personal, Nonbusiness Use.
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Retailing

• Retailing can be done in stores (store retailing)
  or out of a store (nonstore retailing) such as
• Direct mail,
• Catalogs,
• Telephone,
• Home shopping shows,
• Internet.

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Classification of Retailing
Amount of Service Self-Service, Limited-Service
and Full-Service Retailer
Product Line Length and Breadth of the
Product Assortment
Relative Prices Pricing Structure that is Used
by the Retailer
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Classification of RetailingAmount of Service
Self-Service Retailer Provide Few or No
Services to Shoppers i.e. Migros
Limited-Service Retailers Provide Only a Limited
Number of Services to Shoppers i.e. Çarsi
Full-Service Retailers Retailers that Provide a
Full Range of Services to Shoppers i.e. Arçelik
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Classification of RetailingProduct Line
Store Description
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Classification of RetailingRetail Organization
Corporate Chain (TGI)
Membership Group (Fabrika, Çarsi, Network.
Beymen)
Leased (Tepe Home)
Franchise (North Shield)
Independent Retailers