The document discusses marketing channels and distribution, defining marketing channels as the network that creates time, place, and possession utilities for consumers. It examines the structure of marketing channels in terms of length, intensity at various levels, and types of intermediaries. The document also outlines how companies manage marketing channels by formulating channel strategies, designing channel structures, selecting and motivating channel members, and coordinating with other elements of the marketing mix.

1. Marketing Channels
and Distribution
Manish Kumar
Harcourt, Inc.

2. What is a Marketing Channel?
Marketing channel
(a.k.a. distribution
channel) - network of
organizations that
create time, place, and
possession utilities for
consumers

3. Channel Structure
Length of channel
Three Dimensions
els Ty
s lev pe
io u s
at var of
in
sity te
Inten rm
ed
ia
rie
s

4. Channel Structure
Length of marketing channel
1 level 2 level 3 level 4 level
Manufacturer Manufacturer Manufacturer Manufacturer
Agent
Wholesaler Wholesaler
Retailer Retailer Retailer
Consumer Consumer Consumer Consumer

5. Channel Structure
Intensity at various levels
Exclusive
Distribution
Selective
Distribution
Intensive
Distribution

6. Channel Structure
Intensity at various levels
Exclusive Distribution

7. Channel Structure
Intensity at various levels
Selective Distribution
Selectively distributed bands are available in
multiple retail outlets in a particular market
Shopping products, or those that consumers
seek out, are sold through selective distribution

8. Channel Structure
Intensity at various levels
Intensive Distribution
Used when convenience products are sold
through virtually every available retail outlet in
a particular market, e.g. soft drinks, candy,
gum, cigarettes

9. Channel Structure
Types of intermediaries
Merchant Functional
Middlemen Middlemen

10. Channel Structure
Types of intermediaries
Do not take title to products;
they simply facilitate the
exchange process by performing
buying and/or selling functions.
Functional
Middlemen

11. Channel Structure
Types of intermediaries
Take title to products and
resell them.
Merchant
Middlemen

12. Channel Structure
Economics of distribution tasks
Transaction efficiency
Mfg. A Mfg. B Mfg. C
Without
intermediaries
1 2 3 4 5 6 7 8

13. Channel Structure
Economics of distribution tasks
Transaction efficiency
Mfg. A Mfg. B Mfg. C
With
intermediaries Intermediary
1 2 3 4 5 6 7 8

14. Channel Structure
Management’s desire for
control
The shorter the channel
structure the higher the control
Needed when a manufacturer
must protect product image,
etc.

15. Marketing Channel Flows
Product Flow
The movement of the product
from manufacturer through all
parties who take physical
possession
Negotiation Flow
Interplay of buying/selling tasks
associated with title transfer

16. Marketing Channel Flows
Ownership Flow
Movement of title of the product
Information Flow
Information to and from the
manufacturer
Promotion Flow
Flow of persuasive
communication (advertising,
personal selling, etc.)

17. Marketing Channel Flows

18. Marketing Channel Management
Formulating
channel strategy Realize only the place ‘P’
Design channel provides protection from
structure imitation
Select channel
members
Distribution strategies can
Motivate channel
provide sustainable
members competitive advantage
Coordinate with
marketing mix
Evaluate member
performance

19. Marketing Channel Management
Formulating
channel strategy
Set distribution
Design objectives
channel structure
Specify tasks to be
Select channel performed by the
members channel
Motivate channel
Consider alternative
members
structures
Coordinate with
marketing mix Choose optimal
structure
Evaluate member
performance

20. Marketing Channel Management
Formulating
channel strategy Optimal structure identified by
considering:
Design
channel structure Market variables
Select channel Product variables
members Company variables
Motivate channel Intermediary variables
members
Behavioral variables
Coordinate with External environment variables
marketing mix
Evaluate member
performance

21. Marketing Channel Management
Formulating
channel strategy Develop selection criteria
Credit and
Design channel Size Financial
structure Attitude
Condition
Sales
Strength
Select
channel members
Management Prospectiv
Ability e channel Product
Motivate channel Lines
member
members
Management
Coordinate with succession Reputation
marketing mix
Sales Market
Performance
Evaluate member Coverage
performance

22. Marketing Channel Management
Formulating
channel strategy Find prospective channel
members
Design channel
structure Evaluate prospective channel
Select members
channel members
Convert prospectives into
Motivate channel actual channel members
members
Coordinate with
marketing mix
Evaluate member
performance

23. Marketing Channel Management
Formulating
channel strategy Learn about the needs and
problems of channel members
Design channel
structure Advisory committees
Select channel Offer support
members Informal support
Motivate Strategic alliances, partnerships
channel members
Provide ongoing leadership
Coordinate with
marketing mix Continuing focus
Evaluate member
performance

24. Marketing Channel Management
Formulating
channel strategy Product and Channel
Design channel
Retailers (a channel member)
structure play an important role in
product positioning
Select channel
members Personal selling
Motivate channel
members
Coordinate
with marketing mix
Evaluate member
performance

25. Marketing Channel Management
Formulating
channel strategy Pricing and Channel
Design channel
Relevant to channel members:
structure • Profit margins available to
channel members
Select channel • Pricing policies
members
• Incentives
Motivate channel
members
Coordinate
with marketing mix
Evaluate member
performance

26. Marketing Channel Management
Formulating
channel strategy Promotion and Channel
Design channel
Promotions interface with
structure channel members
Select channel Point-of-purchase displays
members Inventory levels
Motivate channel Sales person training
members
Coordinate
with marketing mix
Evaluate member
performance

27. Marketing Channel Management
Formulating
channel strategy Assessment of success of
channel members in
Design channel
structure implementing strategies
Select channel Requires good information
members flows between members
Motivate channel Point-of-sale systems
members
Coordinate with
marketing mix
Evaluate
member performance