Marketing Channels and Supply Chain Management

TYPES OF DISTRIBUTION CHANNELS

A. Direct Selling

- direct sales between buyer & seller

Ex. Mary Kay, Tupperware, Baskets

B. Marketing Intermediaries: Figure 13.2

DUAL DISTRIBUTION

Use of 2 or more distribution channels to reach the same target market.

REVERSE CHANNELS

Backward movement of goods from user to the producer

Ex. recycling

Functions of Intermediaries

Create:

TIME UTILITY

PLACE UTILITY

OWNERSHIP UTILITY

Types of Wholesaling Intermediaries

1. Manufacturer-Owned Facilities- sales branches & offices

2. Independent Wholesaling Intermediaries- account for majority of wholesaling establishments & wholesale

sales in U.S.

Merchant wholesalers: take title to goods they handle

Agents & Brokers: may or may not take possession of goods but they never take title

3. Retailer-Owned Facilities- independent retailers may band together to form buying

groups to get cost savings thru quantity purchases

Factors Affecting Channel Strategy Decisions

1. MARKET FACTORS whether product is intended for the consumer (long) or

the business (short) market

2. PRODUCT FACTORS perishable or complex products(short channels)

generally the more standardized the product, the longer the channel

3. PRODUCER FACTORS companies w/ adequate financial, managerial &

marketing resources are less compelled to utilize intermediaries in marketing their products

4. COMPETITIVE FACTORS inadequate promotion of products may require

manufacturers to develop unique distribution channels

Distribution Intensity

1. INTENSIVE DISTRIBUTION

- used for convenience goods

Ex. Gum, soda, candy, cigarettes

2. SELECTIVE DISTRIBUTION- a firm chooses only a limited number of retailers in a

market area to handle its product line

Ex. Nike

3. EXCLUSIVE DISTRIBUTION

- extreme form of selective distribution

- most often used for specialty goods

Suboptimization

Modes of Transportation

Truck Railroad Pipeline Air Water Carriers