The document discusses marketing channels and distribution systems. It defines key terms like channels, vertical and horizontal systems, and multichannel marketing. It also outlines factors that influence channel selection like product, market, and company considerations. Additionally, it discusses recent trends in marketing channels such as symbiotic marketing, third-party delivery, and direct marketing. The document is a comprehensive overview of marketing channels and distribution concepts.

1. MARKETING CHANNEL
Dr. Gopal Thapa
Tribhuvan University
Email: thapazee@gmail.com

2. Marketing Channel
A channel is the pipe line through which a product flows on
its way to the consumer. Distribution channels are systems
of economic institution through which a producer of goods
delivers them into the hands of their uses.
--------------- R. Baskrick
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3. Marketing Channel
 Marketing channel can be viewed as set of
interdependent organizations involved in the
process of marketing a product or service
available for use or consumption.
- Stern
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4. Marketing Channel
 A channel of distribution for a product is the route
taken by the title of goods as they move from the
producer to the ultimate consumer or industrial
user.
-Stanton
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5. Marketing Channel
 Marketing channel is the path or route taken by
goods or services as they move form producer to
final consumer
- Dictionary of Marketing
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6. Role of Marketing Channel
➢ Information
➢ Promotion
➢ Contact
➢ Matching
➢ Negotiation
➢ Physical Distribution
➢ Financing
➢ Risk Bearing
➢ Ordering
➢ Payment
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7. Factors Influencing the Selection
of Marketing Channel
 Product Consideration
 Market Consideration
 Middlemen Consideration
 Company Consideration
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8. Product Consideration
 Cost per unit
 Technical nature
 Product line
 Perishable product
 Size and weight
 Quality of product
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9. Market Consideration
 Quantity and position of customer
 Cash of credit sales
 Environment: govt. policy, legal provision,
pressure group
 Buying habit of consumer
 Consumer or industrial market
 Competition
 Nature of order
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10. Middlemen Consideration
 Comparative cost
 Service
 Capacity of middlemen
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11. Channel Structure for Consumer
Product
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12. Channel structure for industrial
product
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13. Marketing Channel System
 Vertical channel system
 Horizontal channel system
 Multi-channel system
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14. Vertical Channel System
 A vertical marketing system (VMS) is one in
which the main members of a distribution
channel—producer, wholesaler, and retailer—
work together as a unified group in order to meet
consumer needs
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15. Types of Vertical Channel System
 Corporate vertical channel system
 Contractual vertical channel system
 Administered vertical channel system
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16. Corporate vertical channel system
 In a corporate VMS, one member of the
distribution channel owns the other members.
 Although they are owned jointly, each company
in the chain continues to perform a separate task.
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17. Contractual vertical channel
system
 Contractual VMS consists of independent firms
joined together by contract for their mutual
benefit.
 One type of contractual VMS is a retailer
cooperative, in which a group of retailers buy
from a jointly owned wholesaler.
 Another type of contractual VMS is a franchise
organization, in which a producer licenses a
wholesaler to distribute its products.
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18. Administered vertical channel
system
 In an administered VMS, one member of the
channel is large and powerful enough to
coordinate the activities of the other members
without an ownership stake.
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19. Horizontal Channel System
 A horizontal marketing system is a distribution
channel arrangement whereby two or more
organizations at the same level join together for
marketing purposes to capitalize on a new
opportunity.
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20. Horizontal Channel System
 In this marketing system, the collaboration can be
between:
 Two or more Manufacturers- With an objective of making
optimum utilization of scarce resources.
 Two or more Wholesalers-With the objective of covering a
larger area of the distribution of goods and services.
 Two or more Retailers- With the objective of providing
bulk quantities in a particular area.
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21. Multichannel System
 Multichannel marketing refers to the practice by
which companies interact with customers via
multiple channels, both direct and indirect, in
order to sell. them goods and services
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22. Channel Power
 The Channel Power refers to the ability of any one
channel member to alter or modify the behavior of
other members in the distribution channel, due to
its relatively strong position in the market.
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23. Sources of Channel Power
 Reward power
 Coercive power
 Legitimate power
 Referent power
 Expert power
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24. Recent Trends in Marketing
Channels
 Symbiotic marketing
 Third party delivery
 Multi-channel marketing
 Multi-level marketing
 Channel reduction and elimination
 E-marketing
 Direct marketing
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25. Symbiotic marketing
 Symbiotic marketing is a marketing method in
which one manufacturer sells its finished product
to another for resale under the second
manufacturer's label where that manufacturer
already has access to the market through a well-
established distribution system.
 It was first proposed by Alder two decade ago.
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26. Third party delivery
 Third-party delivery in logistics and supply chain
management is a company's use of third-party
businesses to outsource elements of the company's
distribution and fulfillment services.
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27. Multichannel Marketing
 Multichannel marketing refers to the practice
of interacting with customers using a
combination of indirect and direct
communication channels – websites, retail
stores, mail order catalogs, direct mail, email,
mobile, etc.
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28. Multi Level Marketing
 Multi-level marketing is a strategy that some
direct sales companies use to encourage their
existing distributors to recruit new distributors by
paying the existing distributors a percentage of
their recruits' sales; the recruits are known as a
distributor's "downline."
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29. Channel reduction and elimination
 In a typical distribution channel, the middleman is
the wholesaler or the retailer.
 Manufacturers would eliminate the middleman by
selling products directly to retail stores or
consumers.
 Wholesalers can do the same by skipping retailers
and selling directly to consumers.
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30. Channel reduction and elimination
 Advantages
➢ Cost saving
➢ Efficiency
➢ Better value
➢ Environmental impact
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31. E-marketing
 E-Marketing or electronic marketing refers to the
application of marketing principles and techniques
via electronic media and more specifically the
Internet.
 The terms eMarketing, Internet marketing and
online marketing, are frequently interchanged, and
can often be considered synonymous.
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32. Direct Marketing
 Direct marketing is a form of advertising where
organizations communicate directly to customers
through a variety of media including cell phone
text messaging, email, websites, online adverts,
database marketing, fliers, catalog distribution,
promotional letters and targeted television,
newspaper and magazine advertisements as well
as outdoor advertising
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33. Any Queries?
Thank You
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