Surnma rv

Surnma rv

Marketing channel decisions are among the most complex arid challenging de­ cisions facing the firm. A company's channel decisions directly affect every other marketing decision. Each channel system creates a different level of revenues and costs, and reaches a different segment of target customers. Most producers try to

forge a distribution channel ­ a set of interdependent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user. Marketing channels perform many key functions: information gathering and dissemination; promotion; contact work; matching

offers to buyers' needs; negotiation; physical distribution; financing; and risk

taking

£aeh firm needs to identify alternative ways to reach its market. Available means vary from direct marketing channels to using one, two, three or more intermediary channel levels. Marketing channels face continuous and sometimes dramatic change. Three of the most important trends are the growth of vertical, horizontal and hybrid marketing .systems. These trends affect channel co­ operation, conflict and competition.

Channel design begins with assessing customer channel­service needs and company channel objectives and constraints. The company then identifies the main channel alternatives in terms of the types of intermediary, the number of intermediaries and the channel responsibilities of each.

There are many types of channel intermediary, ranging from wholesalers, brokers and agents to retailers. Wholesaling includes all the activities involved in selling goods or services to those who are buying for the purpose of resale or for business use. Wholesalers perform many functions, including selling and

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promoting, buying and assortment building, bulk­breaking, warehousing, trans­ porting, financing, risk bearing, supplying market information and providing management services and advice. Wholesalers fall into two groups. First,

merchant 'wholesalers take possession of the goods. They include full­service u­holesalers (wholesale merchants, industrial distributors) and limited­service wholesalers (cash­and­carry wholesalers, trucks wholesalers, drop shippers, rack jobbers, producers' co­operatives and mail­order wholesalers). Second, manufac­

turers'' sates branches and offices are wholesaling operations conducted by non­ wholesalers to bypass the wholesalers. Agents and brokers do not take possession of the goods, but are paid a commission for facilitating buying and selling.

Retailers perform activities involved in selling goods and services directly to final consumers for their personal use. There are many types of retailer, which differ in

the amount of service they provide (e.g. self­service, limited service or full service); product line sold (e.g. speciality store, department store, supermarket, convenience store, superstore, hypermarket); and their relative price emphasis

(e.g. discount store, category killer, cash­and­carry' warehouse, warehouse club and catalogue showroom).

Each channel alternative must be evaluated according to economic, control and adaptive criteria. Channel management calls for selecting qualified inter­ mediaries and motivating them. Individual channel members must be evaluated periodically. Companies operating in different geographic markets can apply the key principles of channel management, but must adapt approaches to the con­ ditions in individual markets.

More business firms are now paying attention to physical distribution or marketing logistics. Logistics is an area of potentially high cost savings and improved customer satisfaction. Better logistics management can provide a signifi­ cant source of competitive advantage for companies. Marketing logistics involves co­ordinating the activities of the entire supply chain to deliver maximum value to customers. No logistics system can both maximize customer service and mini­ mize distribution costs. Instead, the goal of logistics management is to provide a targeted level of service at the least cost. The primary logistics functions include order processing, warehousing, inventory management and transportation.

Increasingly, companies are adopting the integrated logistics concept, recog­ nizing that improved logistics requires teamwork in the form of close working relationships across functional areas inside the company, and across various organ­ izations in the supply chain. Companies can achieve logistics harmony among functions by creating cross­functional logistics teams, inlegrative supply manager positions and senior­level logistics executives with cross­functional authority.

Channel partnerships can take the form of cross­company teams, shared projects and information­sharing systems. Through such partnerships, many companies have switched from anticipatory­based distribution systems to customer­ triggered response­based distribution systems. Today, some companies are outsourcing their logistics functions to third­party logistics providers to reduce

costs, increase efficiency and gain faster and more effective access to global markets. The trends ­ higher cost pressures, increasingly demanding customers,

globalization and the rising impact of technologies ­ affect not just the way producers must think about, and manage, channel activities, hut also how channel intermediaries, such as wholesalers and retailers, should adapt their services to meet target customer needs. All members in the entire supply and value­adding chain must be aware of channel developments and their impact on the future of their industry. They must adapt their products or services to satisfy