5. Place = Distribution
• The 4Ps
• Product, Price, Place, Promotion
• What the “P” of Price is to Revenue Management, the “P” of Place is to
Distribution
6. Marketing Channels
a set of interdependent organizations that eases the transfer
of ownership as products move from producer to business
user or consumer.
• You can eliminate middlemen, but not the essential
distribution activities they perform
A Marketing Channel is…
Producers Middlemen
Final
Consumer
Or
Business
7. Economic Utilities
Economic utilities reflect the value that producers and marketers
add to raw materials when they make them into products and offer
them for sale to the public.
form utility
place utility
time utility
possession utility
information utility
9. Specialization and
Division of Labor
Creates greater efficiency
Provides lower production costs
Achieves economies of scale
Aids producers who lack
resources to market directly
Builds good relationships with
customers
14. Define the types of
channel intermediaries
and describe their
functions and activities
Channel Intermediaries and Their
Functions
15. Channel Intermediaries
Retailer
A channel intermediary that
sells mainly to customers.
Merchant
Wholesaler
An institution that buys goods
from manufacturers, takes title
to goods, stores them,
and resells and ships them.
Agents and
Brokers
Wholesaling intermediaries who
facilitate the sale of a product by
representing channel members.
17. Factors Suggesting Type of
Wholesaling Intermediary to Use
Product characteristics
Buyer considerations
Market characteristics
18. Factors Suggesting Type of
Wholesaling Intermediary to Use
Factor Merchant
Wholesalers
Agents/ Brokers
Nature of product Standard Nonstandard,
custom
Complexity of product Simple Complex
Product’s gross margin High Low
Frequency of ordering Frequent Infrequent
Time between order and
receipt of shipment
Shorter lead time Longer lead time
Number of buyers Many Few
Concentration of buyers Dispersed Concentrated
20. Logistics
Logistics
The efficient and cost-
effective forward and
reverse flow and storage of
goods, services, and related
information, into through,
and out of channel member
companies.
26. Business-to-Business
Exchanges on the Internet
Companies drop the intermediary
from the supply chain
“Private exchanges” with select
suppliers automate the supply chain
The Internet has forced traditional
distributors to expand their model.
33. Levels of Distribution
Intensity
Intensive
A form of distribution aimed at
having a product available in
every outlet
Selective
A form of distribution achieved
by screening dealers to eliminate
all but a few in any single area
Exclusive
A form of distribution that
established one or a few
dealers within a given area
34. Levels of
Distribution Intensity
Intensive
Achieve mass market
selling.
Convenience goods.
Many
Selective
Exclusive
Work with selected
intermediaries.
Shopping and some
specialty goods.
Work with single
intermediary. Specialty
goods and industrial
equipment.
Several
One
Intensity
Level
Objective
Number of
Intermediaries
LO4
35. Types of Channel Relationships
Describe the
different channel
relationship types
and their unique
costs and benefits
36. Benefits Hazards
Arm’s Length
Relationship
Fulfills a one time or
unique need; low
involvement/risk
Parties unable to
develop relationship;
low trust level
Cooperative
Relationship
Formal contract
without capital
investment/long-term
commitment; “happy
medium”
Some parties may
need more
relationship
definition
Integrated
Relationship
Closely bonded
relationship;
explicitly defined
relationships
High capital
investment; any
failure could affect
every channel
member
Types of Channel
Relationships
39. Channel Power, Control,
and Leadership
Channel
Power
A channel member’s capacity to control or
influence the behavior of other channel members
Channel
Control
A situation that occurs when one marketing
channel member intentionally affects another
member’s behavior
Channel
Leader
A member of a marketing channel that exercises
authority/power over the activities of other members
41. Channel Conflict
Conflicts may occur if channel members:
Have conflicting goals
Fail to fulfill expectations of other channel
members
Have ideological differences
Have different perceptions of reality
42. Channel Partnering
By COOPERATING, channel members can
speed up inventory replenishment, improve
customer service, and reduce the total costs of
the marketing channel.
the joint effort of all channel members to
create a channel that serves customers
and creates a competitive advantage.
Channel Partnering (Channel
Cooperation) is…
44. Channels and Distribution
Decisions for Global Markets
Global Channel
Development
Channel structure
and type differ
Gray marketing channels
Distribute directly or through foreign partners
45. Identify the special
problems and
opportunities associated
with distribution in
service organizations
Channels and Distribution
Decisions for Services
