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MARKETING CHANNEL
Presented by
Abirami
Jayadharshini
Harshini
Nagaaarthi
saranya
DEFINITION:
A set of practices or activities necessary
to transfer the goods from the point of production to
the point of consumption
MARKETING CHANNEL
Channel level
Channel flow
Channel design
Channel conflict
Channel level
Intermediary in marketing distribution channel
between the producer/manufacturer and the end
consumer
We have various level in channel
Each channel level place an important level in making
the good available to the end consumer
Channel level
Consumer marketing channels
manufacturer
consumer
manufacturer
consumer
manufacturer
consumer
wholesaler
retailerretailer
retailer
wholesaler
manufacturer
consumer
jobber
Channel 0 Channel 1 Channel 2 Channel 3
Industrial marketing channels
manufacturer
Industrial
consumer
manufacturer manufacturer manufacturer
Industrial
consumer
Industrial
consumer
Industrial
consumer
Industrial
distributors
Manufacturer’s
representative
Manufacturer’s
sales branch
Level 0 Level 1 Level 2 Level 3
 Forward flow – Company to its customers – goods
and services
 Backward flow – Customers to the company –
payment for the goods. Returned goods.
 Flows both ways - Information
Channel flow
 Analyzing customer needs
(a) Lot size (b) Waiting and delivery time (c) Spatial
convenience
(d) Product variety (e) Service backup
 Establishing channel objectives
Channel objectives should be stated in terms of targeted
service output levels. Channel design must take into account
the strengths and weaknesses of different types of
intermediaries.
Channel design
 Identifying major channel alternatives
 A channel alternative is described by three elements :
(a)the types of available business intermediaries, (b)
the number of intermediaries needed, (c) and the
terms and responsibilities of each channel member.
a) Lot size
In buying cars for its fleet, Hertz prefers a channel
from which it can buy a large lot size.
A Household wants a channel that permits buying a
lot size of one.
Analyzing customer needs
 b) Waiting and delivery time :
The average time customers of that channel wait for
receipt of the goods. Customers increasingly prefer
faster and faster delivery channels.
 (c) Spatial convenience :
 The degree to which the marketing channel makes it
easy for customers to purchase the product.
 Example : Chevrolet offers greater spatial
convenience than Cadillac, because there are more
Chevrolet dealers.
 Chevrolet’s greater market decentralization helps
customers save on transportation and search costs in
buying and repairing an automobile.
 (d) Product variety :
 The assortment breadth provided by the marketing
channel.
 Normally, customers prefer a greater assortment
because more choices increase the chance of finding
what they need.
 United Spirits Limited (USL) is the largest spirits
company in the world by volume, selling 114 million
cases for the fiscal ending March 21, 2011.
 (e) Service backup :
• The add-on services are the credit, delivery,
installation, repairs and others provided by the
channel. The greater the service backup, the greater
the work provided by the channel.
 Channel objectives are a part of and result from the
company‘s marketing
 objectives that need to be stated in terms of targeted
service output levels.
 Profit considerations and asset utilization must be
reflected in channel objectives and the resultant design.
 It should be the Endeavour of the channel members to
minimize the total channel costs and still provide with the
desired level of service outputs.
Establishing channel objectives
 Companies can choose from a wide variety of channels for
reaching customers from sales forces to agents,
distributors, dealers, direct mail, telemarketing, and the
internet.
 Three Elements of Channel Alternatives :
1. The type of business intermediaries  Company Sales
force, prospects in the area, Manufacture’s Agency,
Industrial Distributors..
2. The number of intermediaries  Intensive Distribution &
Exclusive Distribution.
3. Terms and responsibilities of each channel participants 
price policies, conditions of sale, territorial rights and
specific service to be performed by each party.
Identifying major channel
alternatives
 Horizontal conflicts occurs among firms at the same
level of the channel.
 For example, some Ford dealers in Chicago
complained about other dealers in the city who stole
sales from them by being too aggressive in their
pricing and advertising or by selling outside their
assigned territories.
Channel Conflicts
 Vertical conflicts refers to conflicts between different
levels of the same channel.
 For example, General Motors came into conflict with its
dealer some years ago by trying to enforce service, pricing,
and advertising policies.
 Solution : “For ensuring good performance of the channel,
each channel member’s role must be specified and channel
conflict must be managed.”
THANK YOU

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Marketing channel

  • 2. DEFINITION: A set of practices or activities necessary to transfer the goods from the point of production to the point of consumption MARKETING CHANNEL
  • 3. Channel level Channel flow Channel design Channel conflict
  • 4. Channel level Intermediary in marketing distribution channel between the producer/manufacturer and the end consumer We have various level in channel Each channel level place an important level in making the good available to the end consumer Channel level
  • 6. Industrial marketing channels manufacturer Industrial consumer manufacturer manufacturer manufacturer Industrial consumer Industrial consumer Industrial consumer Industrial distributors Manufacturer’s representative Manufacturer’s sales branch Level 0 Level 1 Level 2 Level 3
  • 7.  Forward flow – Company to its customers – goods and services  Backward flow – Customers to the company – payment for the goods. Returned goods.  Flows both ways - Information Channel flow
  • 8.
  • 9.  Analyzing customer needs (a) Lot size (b) Waiting and delivery time (c) Spatial convenience (d) Product variety (e) Service backup  Establishing channel objectives Channel objectives should be stated in terms of targeted service output levels. Channel design must take into account the strengths and weaknesses of different types of intermediaries. Channel design
  • 10.  Identifying major channel alternatives  A channel alternative is described by three elements : (a)the types of available business intermediaries, (b) the number of intermediaries needed, (c) and the terms and responsibilities of each channel member.
  • 11. a) Lot size In buying cars for its fleet, Hertz prefers a channel from which it can buy a large lot size. A Household wants a channel that permits buying a lot size of one. Analyzing customer needs
  • 12.  b) Waiting and delivery time : The average time customers of that channel wait for receipt of the goods. Customers increasingly prefer faster and faster delivery channels.
  • 13.  (c) Spatial convenience :  The degree to which the marketing channel makes it easy for customers to purchase the product.  Example : Chevrolet offers greater spatial convenience than Cadillac, because there are more Chevrolet dealers.  Chevrolet’s greater market decentralization helps customers save on transportation and search costs in buying and repairing an automobile.
  • 14.  (d) Product variety :  The assortment breadth provided by the marketing channel.  Normally, customers prefer a greater assortment because more choices increase the chance of finding what they need.  United Spirits Limited (USL) is the largest spirits company in the world by volume, selling 114 million cases for the fiscal ending March 21, 2011.
  • 15.  (e) Service backup : • The add-on services are the credit, delivery, installation, repairs and others provided by the channel. The greater the service backup, the greater the work provided by the channel.
  • 16.  Channel objectives are a part of and result from the company‘s marketing  objectives that need to be stated in terms of targeted service output levels.  Profit considerations and asset utilization must be reflected in channel objectives and the resultant design.  It should be the Endeavour of the channel members to minimize the total channel costs and still provide with the desired level of service outputs. Establishing channel objectives
  • 17.  Companies can choose from a wide variety of channels for reaching customers from sales forces to agents, distributors, dealers, direct mail, telemarketing, and the internet.  Three Elements of Channel Alternatives : 1. The type of business intermediaries  Company Sales force, prospects in the area, Manufacture’s Agency, Industrial Distributors.. 2. The number of intermediaries  Intensive Distribution & Exclusive Distribution. 3. Terms and responsibilities of each channel participants  price policies, conditions of sale, territorial rights and specific service to be performed by each party. Identifying major channel alternatives
  • 18.  Horizontal conflicts occurs among firms at the same level of the channel.  For example, some Ford dealers in Chicago complained about other dealers in the city who stole sales from them by being too aggressive in their pricing and advertising or by selling outside their assigned territories. Channel Conflicts
  • 19.  Vertical conflicts refers to conflicts between different levels of the same channel.  For example, General Motors came into conflict with its dealer some years ago by trying to enforce service, pricing, and advertising policies.  Solution : “For ensuring good performance of the channel, each channel member’s role must be specified and channel conflict must be managed.”