Channel Management

1
Channel Management
2
Distribution Channel

• The Series of Firms or Individuals that
  Facilitate the Movement of a Product From the
  Producer to the Final Consumer.
• May include
• manufacturers,
• wholesalers,
• retailers.
• Making the goods and services available where and
  when customers need and want them.

3
Service Output Levels of Marketing Channels of
Distribution
4
Marketing Channel Functions and Flows
Overcomes the time, place, and possession gaps
that separate goods and services from those who
would use them
Information The collection and dissemination of
marketing research information about potential
and current customers, competitors, and other
actors and forces in the marketing
environment. Promotion The development and
dissemination of persuasive communications about
the offer designed to attract customers.
5
Marketing Channel Functions and Flows (continued)
Negotiation The attempt to reach final
agreement on price and other terms so that
transfer of ownership or possession can be
effected. Ordering The backward communication
of intentions to buy by the marketing channel
members to the manufacturer. Financing The
acquisition and allocation of funds required to
finance inventories at different levels of the
marketing channel.
6
Marketing Channel Functions and Flows (continued)
Risk Taking The assumption of risks connected
with carrying out the channel work. Physical
Possession The successive storage and movement
of physical products from raw materials to the
final customers. Payment Buyers paying their
bills through banks and other financial
institutions to the sellers. Title The actual
transfer of ownership from one organization or
person to another.
7
Building Customer Value
Delivering Product Benefits Delivering Service
Benefits Building Brand Image Building Company
Benefits Improving Cost Efficiency
8
Alternative Channel Systems

• Direct Channel Systems Provide alternative
  direct channel and sales systems that require the
  business to retain ownership (title) of products
  sold and responsibility for delivery to customers
  and value-added functions desired by customers.

9
Alternative Channel Systems

• Indirect Channel Systems Provide varying degrees
  of sales and value-added functions while taking
  ownership and responsibility for delivery to
  target customers or other intermediaries.

10
Alternative Channel Systems

• Mixed Channel Systems Provide direct sales
  contact and technical support while the actual
  purchase is made at a channel intermediary who
  has taken title (ownership) of the products being
  sold.

11
Marketing Channels and Sales Systems Used to
Reach Software Buyers
12
Benefits of Different Consumer Channels

• Direct Channel
• Manufacturer can serve customers better.
• Lower prices than may be possible using a
  retailer.
• Control of pricing, service and delivery.

• Indirect Channel
• Customers are used to buying from certain
  retailers.
• Intermediaries help by
• creating utility and
• transaction efficiencies

13
Distribution Outlet Sharevs. Market Share
14
Distribution Systems
15
Corporate Common ownership at different levels of
the channel
Vertical Marketing Channel Systems
Administered Leadership is assumed by one or a
few dominant members
Contractual Contractual Agreement Among Channel
Members
16
Vertical Marketing Systems
Vertical Marketing Systems (VMS)
17
Distribution System Intensity