Marketing channels represent sets of interdependent organizations that help make a product available to consumers. They perform functions like information gathering, order processing, financing inventory, and facilitating payment. Manufacturers use either a push strategy by incentivizing distributors to promote products, or a pull strategy by advertising directly to consumers. Selecting channels depends on market, product, organizational and competitive factors. Channel conflicts can occur between members at different levels over issues like pricing. This document discusses the roles and types of marketing channels and intermediaries that connect producers and consumers.

1. MARKETING CHANNELS AND
VALUE NETWORKS
Marketing Management
2012
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2. Introduction
 Most producers do not sell their goods
directly to the final users; between them
stands a set of intermeriaries performing a
variety of functions
 These intermediaries costitute a marketing
channel (also called a trade channel or
distribution channel)
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3. Introduction
 Marketing channels are sets of
interdependent organizations participating in
the process of making a product or service
available for use or consumption
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4. The Importance of Channels
o Marketing channels also represent a
substantial opportunity cost
o One of their chief roles is to convert potential
buyers into profitable customer,
o Marketing channels must not just serve
markets, they must also make markets
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5. Push versus Pull Strategy1
 A push strategy uses the manufacturer’s sales
force, trade promotion money, or other
means to induce intermediaries to
carry, promote, and sell the product to end
users
 A push strategy is particularly appropriate
when there is low brand loyalty in a
category, brand choice is made in the
store, the product is an impulse item, and
product benefits are well understood
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6. Push versus Pull Strategy2
 In a pull strategy the manufacturer uses
adevertising, promotion, and other forms of
communication to persuade consumers to
demand the product from intermediaries, thus to
inducing the intermediaries to order it
 Pull strategy is particularly appropriate when
there is high brand loyalty and high involvement
in the category, when consumers are able to
perceive differences between brands, and when
they choose the brand before they go to the store
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7. Channel Member Functions
 Gather information about potential and current
customers, competitors, and other actors and
forces in the marketing environment
 Develop and disseminate persuasive
communications to stimulate purchasing
 Negotiate and reach agreements on price and
other terms so that transfer of ownership or
possesion can be affected
 Place orders with manufacturers
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8. Channel Member Functions
 Acquire the funds to finance inventories at
different levels in the marketing channel
 Assume risks connected with carrying out
channel work
 Provide for the successive storage and
movement of physical products
 Provide for buyers’ payment of their bills
through banks and other financial institutions
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9. Major Factors in Selecting a
Marketingt Channel
1) Market,
2) Product,
3) Organizational,
4) Competitive
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10. General Categories
of Distribution Intensity
 Intensive distribution seeks to distribute a
product through all available channels in a
trade area,
 Selective distribution chooses a limited
number of retailers in a market area,
 Exclusive distribution grants exclusive rights to
a wholesaler or retailer to sell a
manufacturer’s products
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11. Types of Channel Conflict
 Horizontal conflict results from
disagreements among channel members at
the same level
 Vertical conflict occurs when channel
members at different level disagree
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12. Elements of Physical Distribution
 customer service,
 transportation,
 inventory control,
 materials handling and protective packaging,
 order processing, and
 warehousing
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13. The Types of Warehouse
 Storage warehouses; hold goods for moderate
to long periods of time to balance supply and
demand
 Distribution warehouse; assemble and
redistribute goods as quickly as possible
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22. Insight :
Jurnal Studi Manajemen & Organisasi
• A research article by Sri Rahayu Tri Astuti and
Agustinus Prayudhanto (Juli 2006)
• Consumer loyalty : 0,203 store location +
0,260 product + 0,306 price + 0,071
advertising and promotion + 0,115 outlet
athmosphere + 0,185 service
• Adjusted R square = 0,584
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23. rizalharimagnadi@undip.ac.id
Management Departement
Faculty of Economics and Business
Diponegoro University
Semarang
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