1. C hapter 13: Distribution Channels All roads lead to Rome

5. Information Promotion Contact Matching Negotiation Physical Gathering and distributing marketing research about the environment Developing and spreading persuasive communications about an offer Finding and communicating with prospective buyers Shaping and fitting the offer to the buyer’s need Agreeing on price and terms of the offer so ownership or possession can be transferred Distribution: transporting and storing goods Financing Acquiring and using funds to cover the costs of channel work Distribution Key Functions Channel Risk Taking Assuming financial risks such as the inability to sell inventory at full margin Distribution Channel Functions

6. Channel Level - Each Layer of Marketing Intermediaries that Perform Some Work in Bringing the Product and its Ownership Closer to the Final Buyer. Number of Channel Levels Wholesaler Jobber Retailer Consumer     Consumer Retailer Consumer  Producer 0-level channel Wholesaler Retailer Consumer   Producer 2-level channel Producer 3-level channel 1-level channel Producer

7. Travel Agents Tour Wholesalers Concierges Specialists: Brokers & Junket Reps Internet Hotel Representatives Consortia & Reservations Systems Global Distribution Systems National, State, and Local Tour Agencies Marketing Intermediaries

9. Supplier Wholesaler Travel agent Tour Packages Usually Air travel + lodging may include [ meals + entertainment + ground transportation + sightseeing tours + special entrance fees] Tour Wholesalers A company that operates as an intermediary between the travel product supplier and the retail travel agent in the marketplace. (Tour operators often operate as wholesalers.) Marketing Intermediaries

17. Vertical marketing channel Manufacturer Retailer Conventional marketing channel Manufacturer Wholesaler Conventional Distribution Channel vs. Vertical Marketing Systems Consumer Consumer Retailer Wholesaler

18. Corporate Common Ownership at Different Levels of the Channel Contractual Contractual Agreements Among Channel Members Administered Leadership is Assumed by One or a Few Dominant Members Degree of Direct Control Channel Organization Types of Vertical Marketing Systems

20. Advantages Disadvantages Franchisor 1. Capital for growth 2. Faster growth 3. Additional management 4. Additional income 1. Lower potential profits 2. Controlling service quality 3. Controlling firm image Franchisee 1. Lower risk 2. Established brand name 3. Successful business plan 4. Expert assistance 1. Franchisee fees 2. Lack of freedom 3. Controlled by franchisor Vertical Marketing System Franchising

22. c Vertical Marketing System Alliances Trade for preferred relationship with global networks Gain preferred access to each other’s local customer base Pool policy expertise, costs, and capabilities Implement consumer-oriented, commercially driven operations and services