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Marketing Channels
Designs & Dynamics
Work Performed by Marketing Channels
 Channel-Design Decisions
 Channel-Management Decisions
 Channel Dynamics

How a Distributor Reduces the
Number of Channel Transactions
1
2
3
4
5
6

A. Number of contacts
without a distributor
MxC=...
How a Distributor Reduces the
Number of Channel Transactions

1
Store

2

3
= Manufacturer

B. Number of contacts
with a d...
Distribution Channel Functions
Information
Information
Transfer
Transfer
Payments
Payments
Physical
Physical
Distribution
...
Consumer Marketing Channels

0-level channel

Manufacturer
Manufacturer

Consumer
Consumer

1-level channel
Retailer
Retai...
Manufacturer’s
representative
Manufacturer’s
sales branch

Consumer

Manufacturer

Industrial
distributors
Lot size
 Waiting time
 Spatial convenience
 Product variety
 Service backup

Break-Even Cost Chart
Manufacturer’s
sales agency
Company
sales force

Selling
costs
(dollars)

SB
Level of sales (dollars...
Channel Management Decisions

Selecting
Selecting
Training
Training
Motivating
Motivating
Evaluating
Evaluating
Type of Vertical Marketing System

Corporate
Corporate

Common Ownership at Different
Common Ownership at Different
Levels...
Conventional Distribution Channel vs.
Vertical Marketing Systems
Vertical
marketing
channel

Manufacturer

Manufacturer

W...
Incompatibility
 Difference in Perception
 Dependence

Exclusive Dealing
 Exclusive Territories
 Tying Agreements
 Dealers’ Rights

Work Performed by Marketing Channels
 Channel-Design Decisions
 Channel-Management Decisions
 Channel Dynamics

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Marketing channels designs & dynamics

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Marketing channels designs & dynamics

  1. 1. Marketing Channels Designs & Dynamics
  2. 2. Work Performed by Marketing Channels  Channel-Design Decisions  Channel-Management Decisions  Channel Dynamics 
  3. 3. How a Distributor Reduces the Number of Channel Transactions 1 2 3 4 5 6 A. Number of contacts without a distributor MxC=3X3=9 7 8 9 = Manufacturer = Customer
  4. 4. How a Distributor Reduces the Number of Channel Transactions 1 Store 2 3 = Manufacturer B. Number of contacts with a distributor MxC=3+3=6 4 5 6 = Customer = Distributor
  5. 5. Distribution Channel Functions Information Information Transfer Transfer Payments Payments Physical Physical Distribution Distribution Risk Taking Risk Taking Communication Communication Negotiation Negotiation Ordering Ordering Financing Financing
  6. 6. Consumer Marketing Channels 0-level channel Manufacturer Manufacturer Consumer Consumer 1-level channel Retailer Retailer → Consumer Consumer Retailer Retailer Manufacturer Manufacturer → Consumer Consumer Retailer Retailer → Consumer Consumer 2-level channel Mfg Mfg → Wholesaler Wholesaler 3-level channel Mfg Mfg → Wholesaler→ Wholesaler Jobber Jobber →
  7. 7. Manufacturer’s representative Manufacturer’s sales branch Consumer Manufacturer Industrial distributors
  8. 8. Lot size  Waiting time  Spatial convenience  Product variety  Service backup 
  9. 9. Break-Even Cost Chart Manufacturer’s sales agency Company sales force Selling costs (dollars) SB Level of sales (dollars)
  10. 10. Channel Management Decisions Selecting Selecting Training Training Motivating Motivating Evaluating Evaluating
  11. 11. Type of Vertical Marketing System Corporate Corporate Common Ownership at Different Common Ownership at Different Levels of the Channel Levels of the Channel Administered Administered Leadership is Assumed by One or Leadership is Assumed by One or a Few Dominant Members a Few Dominant Members Contractual Contractual Contractual Agreement Among Contractual Agreement Among Channel Members Channel Members
  12. 12. Conventional Distribution Channel vs. Vertical Marketing Systems Vertical marketing channel Manufacturer Manufacturer Wholesaler Retailer Consumer Wholesaler Conventional marketing channel Retailer Consumer
  13. 13. Incompatibility  Difference in Perception  Dependence 
  14. 14. Exclusive Dealing  Exclusive Territories  Tying Agreements  Dealers’ Rights 
  15. 15. Work Performed by Marketing Channels  Channel-Design Decisions  Channel-Management Decisions  Channel Dynamics 

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