© 2016 by McGraw-Hill Education. This is proprietary

© 2016 by McGraw-Hill Education. This is proprietary material
solely for authorized instructor use. Not authorized for sale or
distribution in any manner.
This document may not be copied, scanned, duplicated,
forwarded, distributed, or posted on a website, in whole or part.
1
LO1
Explain what is meant by a marketing channel of distribution
and why intermediaries are needed.
Distinguish among traditional marketing channels, electronic
marketing channels, and different types of vertical marketing
systems.
LO2
LEARNING OBJECTIVES (LO)
AFTER READING CHAPTER 12, YOU SHOULD BE ABLE
TO:
12-2

2
LEARNING OBJECTIVES (LO)
AFTER READING CHAPTER 12, YOU SHOULD BE ABLE
TO:
LO3
Describe factors that marketing executives consider when
selecting and managing a marketing channel.
Explain what supply chain and logistics management are and
how they relate to marketing strategy.
LO4
12-3
3
CALLAWAY GOLF: DESIGNING AND DELIVERING THE
GOODS FOR GREAT GOLF
12-4
Calloway Golf

4
FIGURE 12-1 The variety of terms used
for marketing intermediaries that vary in specificity and use in
consumer and business markets
12-5
5
NATURE AND IMPORTANCE OF MARKETING CHANNELS
THE VALUE CREATED BY INTERMEDIARIES
LO1
Marketing Channel
Functions Performed by Intermediaries
Transactional Function
Logistical Function
Facilitating Function
Utilities Received by Consumers
12-6

6
FIGURE 12-2 Marketing channel intermediaries perform three
functions,
each consisting of different activities
12-7
7
CHANNEL STRUCTURE & ORGANIZATION
MARKETING CHANNELS FOR
CONSUMER PRODUCTS AND SERVICES
LO2
Direct Channel
Indirect Channel
Retailers
A
12-8

8
FIGURE 12-3 Common marketing channels for consumer
products and services by the kind and number of intermediaries
12-9
9
MARKETING CHANNELS FOR
BUSINESS PRODUCTS AND SERVICES
LO2
Direct Channel
Indirect Channel
Industrial Distributor
Agents
12-10
10

FIGURE 12-4 Common marketing channels for business
products and services by the kind and number of intermediaries
12-11
11
INTERNET & DIRECT MARKETING CHANNELS;
MULTICHANNEL MARKETING
LO2
Internet Marketing Channels
Direct Marketing Channels
Multichannel Marketing
12-12
12

FIGURE 12-5 Consumer Internet marketing channels are
similar to those for consumer products and services
12-13
13
DUAL DISTRIBUTION &
STRATEGIC CHANNEL ALLIANCES
LO2
Dual Distribution
Strategic Channel
Alliances
Honey Nut
Cheerios Ad
12-14
14

MARKETING MATTERS
Nestlé and General Mills—
Cereal Partners Worldwide
LO2
12-15
Cereal Partners
15
FIGURE 12-6 Three types of vertical marketi ng systems:
corporate, contractual (most popular), and administered
12-16
16
VERICAL MARKETING SYSTEMS
LO2
Vertical Marketing Systems

Corporate Systems
Wholesaler-Sponsored Voluntary Chains
Contractual Systems
Retailer-Sponsored Cooperatives
Forward Integration
Backward Integration
12-17
17
VERICAL MARKETING SYSTEMS
LO2
Contractual Systems
Franchising
Manufacturer-Sponsored Retail Franchises
Manufacturer-Sponsored Wholesale Franchises
Service-Sponsored Retail Franchises
Service-Sponsored Franchises
Administered Systems
12-18
18

CHANNEL CHOICE AND MANAGEMENT
CHANNEL CHOICE CONSIDERATIONS
LO3
Target Market Coverage (Density)
Intensive Distribution
Exclusive Distribution
Selective Distribution
12-19
19
CHANNEL CHOICE CONSIDERATIONS
LO3
Information
Convenience
Variety
Pre- or Post-Sale
Service
Buyer Requirements
Profitability
12-20

20
USING MARKETING DASHBOARDS
Channel Sales and Profit at
Charlesburg Furniture
LO3
12-21
21
CHANNEL RELATIONSHIPS
LO3
Sources of Channel Conflict
Vertical Conflict
Disintermediation
Horizontal Conflict
12-22

22
CHANNEL RELATIONSHIPS
LO3
Channel Influence
Economic
Expertise
Identification
Legitimate Right
Channel Captain
12-23
23
LOGISTICS & SUPPLY CHAIN MANAGEMENT
KEY CONCEPTS
LO4
Logistics
Logistics
Management
Customer
Requirements
Customer Service
Supply Chain

Supply Chain
Management
Cost-Effective Flow
The Automotive
Supply Chain
12-24
24
FIGURE 12-7 Relating logistics management and supply chain
management to supplier networks and marketing channels
12-25
25
FIGURE 12-8 The automotive supply chain includes thousands
of firms that provide the parts, components, and software in a
typical car
12-26

26
Aligning a Supply Chain with Marketing Strategy
Understand the Customer
Understand the Supply Chain
Harmonize the Supply Chain
with the Marketing Strategy
SUPPLY CHAIN MGMT & MKT STRATEGY
LO4
12-27
27
MARKETING MATTERS
IBM’s Integrated Supply Chain—
Delivering a Total
Solution

for Its Customers
LO4
12-28
IBM Video
28
SUPPLY CHAIN MGMT & MKT STRATEGY
LO4
Dell: A Responsive Supply Chain
Wal-Mart: An Efficient Supply Chain
Cross-docking

12-29
Dell Web site
Walmart Web site
solely for authorized instructor use. Not authorized for sal e or
29
TWO CONCEPTS OF LOGISTICS MANAGEMENT IN A
SUPPLY CHAIN
LO4
Total Logistics Cost Concept
Customer Service Concept
12-30

30
FIGURE 12-9 Supply chain managers balance total logistics
cost factors against customer service factors
12-31
31
KEY FUNCTIONS IN A SUPPLY CHAIN
CUSTOMER SERVICE FACTORS
LO4
Time
Lead Time

Order Cycle Time
Replenishment Time
Quick Response
Efficient Consumer Response
12-32
32
Dependability
Communication
Convenience
Vendor-Managed Inventory (VMI)
KEY FUNCTIONS IN A SUPPLY CHAIN
CUSTOMER SERVICE FACTORS
LO4
12-33

33
CLOSING THE LOOP:
REVERSE LOGISTICS
LO4
Reverse Logistics
UPS Video
12-34
34

MAKING RESPONSIBLE DECISIONS
Reverse Logistics and Green Marketing
Go Together at Hewlett-Packard: Recycling e-Waste
LO4
12-35
HP Recycling Video
35
AMAZON: DELIVERING THE GOODS…MILLIONS OF
TIMES A DAY
VIDEO CASE 12
12-36

Amazon
Video case
36
VIDEO CASE 12
AMAZON
1. How do Amazon.com’s logistics and supply chain
management activities help the company create value for its
customers?
12-37

37
VIDEO CASE 12
AMAZON
2. What systems did Amazon develop to improve the flow of
products from suppliers to Amazon distribution centers? What
systems improved the flow of orders from the distribution
centers to customers?
12-38
38
VIDEO CASE 12
AMAZON

3. Why will logistics and supply chain management play an
important role in the future success of Amazon.com?
12-39
39
MARKETING CHANNELS
FOR APPLE
IN-CLASS ACTIVITY 12-1

ICA 12-1
Apple Marketing Channel Structure:
Apple Online Store—Direct Channel
Customers
Consumer
Producer
Apple Store
Producer
E-commerce
Web Site

ICA 12-1
Apple Retail Store—Direct Channel
Customers
Consumer
Producer
Apple Store
Producer
Retail Store
Outlet
ICA 12-1

Ingram Micro/Best Buy—Indirect Channel
Customers
Ingram Micro
Web site
Best Buy Web site
Producer
Wholesaler/Distributor
Retailer
ICA 12-1
MacMall Retail Store/Online/Catalog—Indirect Channel

Customers
Consumer
Producer
Retailer
Apple Store
Producer
MacMall
MARKETING CHANNELS
FOR FASTENAL
IN-CLASS ACTIVITY 12-2

ICA 12-2
Marketing Channels
Fastenal
Web site
Example:
Marketing Channels for
Fastenal Fasteners
(Unique Heads/Tops)

FIGURE 12-4 Common marketing channels for business
products and services
Marketing Channel
A marketing channel consists
of Individuals and firms involved
in the process of making a
product or service available for use or consumption by
consumers or industrial users.

12-48
48
Multichannel Marketing
Multichannel marketing involves
the blending of different communication and delivery channels
that are mutually reinforcing in attracting, retaining, and
building relationships with consumers who shop and buy in
traditional intermediaries and online.
12-49
solely for authorized instructor use. Not authorized for sal e or

49
Dual Distribution
Dual distribution involves an arrangement whereby a firm
reaches different buyers by employing two or more different
types of channels for the same basic product.
12-50
50

Vertical Marketing Systems
Vertical marketing systems
are professionally managed and centrally coordinated marketing
channels designed to achieve channel economies and
maximum marketing impact.
12-51
51
Intensive Distribution
Intensive distribution is a level of distribution density whereby
a firm tries to place its products and services in as many outlets
as possible.

12-52
52
Exclusive Distribution
Exclusive distribution is a level of distribution density whereby
only one retailer in a specific geographical area carries the
firm’s products.
12-53

53
Selective Distribution
Selective distribution is a level of distribution density whereby
a firm selects a few retailers in a specific geographical area to
carry its products.
12-54
54
Channel Conflict

Channel conflict arises when
one channel member believes another channel member is
engaged in behavior that
prevents it from achieving its goals.
12-55
55
Disintermediation
Disintermediation involves
channel conflict that arises when
a channel member bypasses another member and sells or
buys products direct.
12-56

56
Logistics
Logistics consists of those activities that focus on getting the
right amount of the right products to the right place at the right
time at the lowest possible cost.
12-57

57
Supply Chain
A supply chain consists of a sequence of firms that perform
activities required to create and deliver a product or service to
ultimate consumers or industrial users.
12-58
58
Total Logistics Cost
Total logistics cost consists of the expenses associated with

transportation, materials handling and warehousing, inventory,
stockouts (being out of inventory), order processing, and return
goods handling.
12-59
59
Customer Service
Customer service is the ability
of logistics management to satisfy users in terms of time,
dependability, communication, and convenience.
12-60

60
Vendor-Managed Inventory (VMI)
Vendor-managed inventory (VMI) is an inventory-management
system whereby the supplier determines the product amount and
assortment a customer (such as a retailer) needs and
automatically delivers the appropriate items.
12-61
61

Reverse Logistics
Reverse logistics is a process
of reclaiming recyclable and reusable materials, returns, and
reworks from the point of consumption or use for repair,
remanufacturing, redistribution,
or disposal.
12-62
62

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