Consumer Product Channels

A. One-Level Channel

B. Two-Level Channel

C. Three-Level Channel

D. Strategic Channel Alliance

Marketing Channels for Industrial Products

A. Credit and financial condition of the

distributor

B. Sales strength

C. Product lines

D. Reputation

E. Market Coverage

F. Sales performance

G. Management succession

H. Management ability

I. Attitude

J. Size

Major Coverage Strategies:

Intensive Distribution: A company uses all available

distribution outlets for making its product available to

customers.

Selective Distribution: Companies use selective distribution,

which means using more than a few and less than all available

outlets in a market area to distribute products.

Exclusive Distribution: One where the producer grants

exclusive selling rights to a middleman in a certain area.

Exclusive

Selective

Intensive Many

Few

One

Types of Conflicts:

Vertical Channel Conflict

Horizontal Channel Conflict

Multichannel Conflict

Major Causes of Conflict:

Goal incompatibility

Roles and rights ambiguity

Differing perceptions

- is that marketing function which facilitates

the movement of goods from the

manufacturer to the location of ultimate

users.

Supplies

Parts

Raw Materials

THE

FIRM

Warehouses

Wholesales

Retailers

CONSUMERS

Supply Chain

Management

Physical Distribution

Order

Processing

Inventory

Control

Warehou-

sing

Materials

Handling

Transporta-

tion

Marketing Channels

1. Improve Customer Service

2. Reduce Distribution Costs

3. Create Time and Place Utilities

4. Stabilize Prices

5. Influence Channel Decisions

6. Control Shipping Costs

Inventory Planning and Control

Economic Order Quantity (EDQ) mode:

Q= square root of 2TS/CI

Where: Q= EDQ, T= total units disposed per year, S= restocking (or ordering) cost, C= cost per unit, I= annual carrying cost

Transportation

Forms of Transportation:a. railroads

b. trucks

c. water vessels

d. pipelines

e. airplanes

Special Transport Agencies:

a. Post Office

b. Parcel Service

c. Freight Forwarders

Warehousing

Types of Warehousing:

1. Private Warehouses

2. Public Warehouses

Number and Location of Warehousing Facilities

Typical Means of Transporting Various

Products

It refers to receiving, recording, filling and

assembling orders for shipment.

Order Cycle - the steps undertaken from the time the

customer makes an order up to the time the ordered

goods are delivered.

The Major Components of the Order Cycle:

o Order Placement: refers to the time that elapses

from the time the customer develops the order is received by the seller.

o Internal Order Processing: refers to the time

required to the process the customer’s order until it is ready for shipment.

o Order Preparation: refers to all activities relating to

the picking and packaging of individual customer orders.

o Order Shipment: refers to the time the order is

placed upon a transport facility until the goods ordered are unloaded and received by the customer.

Order

Placement

Order

Processing

Order

Preparation

Order Shipment

It refers to the activities involved in moving goods over

short distances into, within, and out of warehouses and

manufacturing plants.

The objectives of a materials handling subsystem are as follows:

1. to increase the usable capacity of the warehouse

facility;

2. to reduce the number of times goods are handled;

3. to minimize the possibility of danger to people who

are working around the warehouse;

4. to respond quickly and efficiently to customers’

orders.

Understand the roles of retailers and wholesalers in the

marketing channel.

Know the major types of retailers.

Know the major types of wholesalers.

Understand the marketing decisions facing retailers and

wholesalers.

All activities involved in selling goods or

services directly to final consumers for

their personal, nonbusiness use.

is one whose business firm sells mainly to

the final consmer.

o Convenience

o Guarantee and Service

o Financing

o Promotion

o Storage

o Intelligence

o Buying agents

Sales VolumeAccording to sales volume, retail stores may be classified as: (1)

small; (2) medium);or (3) large. This classification does not include

the micro enterprises operating all over the Philippines.

Product Mix OfferedRetailers may also be classified based on product lines they carry.

They may be categorized into: (1) general merchandise stores;

and specialty stores.

General Merchandise Stores are those that carry a large variety

of product lines.

• Department stores

• Variety stores

Specialty Stores are those which carry only a specific line of

products.

• Single-line specialty store

• Limited-line specialty store

Form of OwnershipRetail stores operate under any of the various forms of ownership.

They may either be: (1) corporate chain stores; (2) independent

stores; or franchise stores.

Method of OperationRetailers also vary according to their method of operation. They

may either be: (1) full service retailers, (2) supermarkets; (3)

nonstore retailers.

Full Service Retailers are stores where assistance in a very

variety of ways is extended to the customers.

Supermarkets are large department stores which offers a variety

of goods including apparel, groceries, bread, dairy, and candies.

Discount Stores are self-service retailers that sells a wide variety

of goods at less than traditional retail prices.

Nonstore Retailers refer to those who sell outside of the store.

• Telephone retailers

• Vending machine retailers

• Mail-order retailer

All activities involved in selling goods

and services to those buying for resale or

business use.

1. the sale of a computer unit for office use;

2. the sale of sugar as raw material for candies;

3. the sale of electric guitar to a professional

guitarist;

4. the sale of janitorial services to an office;

5. the sale of a bus to a transportation company;

6. the sale of books to a university; and

7. the sale of vegetables to a retailer.

Anticipating Customer Needs

Selling and Promotion

Financing

Storage

Breaking Bulk

Transportation

Risk-Taking

A B C D E

F G H I JEA B C D

F G H I J

wholesaler

Full Function Wholesalers Merchant Wholesalers: are independently-owned

establishments which take title to the merchandise they carry.

a. General line

b. Specialty line

Sales Offices and Branches: are manufacturer owned

and controlled wholesale outlets. The sales branch carries

inventory, while the sales office does not.

Agents: act as representatives of manufacturers in the selling

process.

a. Manufacturer’s agents

b. Selling agents

Brokers: are “neutral” middlemen until he is called to serve

either the seller or the buyer.

Commission Houses: or merchants take physical possession

of merchandise but not the title.

Limited Function Wholesalers Drop Shippers: wholesalers who take title to the products

but do not physically handle them.

Truck Distributors: wholesalers who operate warehouses

and trucks.

Mail-Order Wholesalers: who sell through mails send

catalogs to retail, industrial, and institutional

customers.

Cash-and-Carry Wholesalers: who sell to customers in their

warehouses on cash basis.

Cooperatives: some retailers wish to obtain the economic

benefits of running a wholesaling cooperative.

Rack Jobbers: these are those that maintain their own racks

within a retail establishment.

Industrial Wholesalers those also serving the retailers:

sales branches

brokers

manufacturers’ agents

combination houses

industrial distributors serving only the industrial market:

general line wholesalers

specialty line wholesalers

Industrial distributors: are also full function wholesalers

performing all or most of the marketing functions.

General line: carry a complete assortment of goods in a

single line.

Combination house: is involved in selling to both the

industrial user and the retailers.