BERMAN01.PPT 52KB Jun 05 2011 09:30:17 PM

MARKETING CHANNELS
Introduction
Berman Chapter 1
Version 3.0
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Introduction
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1. Marketing Channels defined
2. Functions Performed by Intermediaries
3. Alternative Channel Structures
4. Characteristics of Channel Relationships
5. Importance of Channel Management to
the Firm
• 6. Importance of Channel Management to
the Economy

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1. Channel Management
Definition
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an organized network or system
of agencies and institutions
performing activities
to link producers with users

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1. Marketing Channels
Components
• organized network or system
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sharing common objectives
concerning customer service and product image
independently owned / integrated strategy
long term contracts
common goals

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1. Marketing Channels
Participants
• Channel Participants
– agencies and institutions
– intermediaries
• manufacturers
• wholesalers

• retailers

– facilitators
• research, physical distribution, financing,
advertising
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1. Marketing Channels
Activities
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physical possession
ownership
promotion
negotiation

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financing
risking
ordering
payment

linkage of producers and users
conventional channels
franchises
contract pricing
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1. Marketing Channels
Relationships
• Retailing - sales of goods and services to
end users
• Wholesaling - sales for resale

• Physical Distribution - movement of
finished goods inventory to channel
members

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2. Intermediary Functions
• sorting - breaking bulk and contactual
efficiency
• mass distribution
• customer contact
• credit
• market research
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2. Channel Functions
• can be shifted among members
• cannot be eliminated
• Bucklin’s system of service outputs
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spatial convenience or market decentralization
lot size
product variety or assortment breadth
waiting or delivery time
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3. Alternative Channel Structures
• channel specialization
• competitive advantage tasks
– short (direct) vs long (indirect) channels
– channel width - intensity
• intensive - selective - exclusive

– dual channels

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4. Special Channel Characteristics
• member divided loyalty - suppliers and
customers
• selling to (push) and selling through (pull)
• long term relationships
• relationship marketing ( partnering)
• high switching costs
– direct and indirect
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5. Channel Importance
• Competitive Advantage
• Channel Based Strategy
• Relationships of firms
– areas of management levels, marketing, sales,
advertising, products, physical distribution,
market research, legal, controller,
manufacturing, production control, engineering,
etc

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5. Channel Importance
Competitive Advantage
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exclusive distribution
dual channels
non-traditional channels
access to broad network
technology
superb customer service
low cost distribution

access to a specialized markets
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6. Channel Management Importance
to the Economy
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Product Planning
Pricing Management
Promotion Management
Channel Values
Employment
Sales
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6. Channel Importance
Product Planning
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new products / same channel
new products / same members
existing members / new channels
channel members / product recall
new products / shelf space
products services/ franchises / image
specialized products / small markets
refusal to sell
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6. Channel Importance
Pricing Management
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wholesaler / retailer profit margins
price reductions / retailers list price
gray markets / transshipping
quantity discounts / maximize share
discounters pricing / full service retailers
seasonal discount structure / retailer order
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6. Channel Importance
Promotion Management
• push / pull budgeting
• advertising, public relations, sales
promotion mix
• coop advertising plan
• sales contests, other promotions
• wholesaler quotas
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