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Objectives Work Performed by Marketing Channels Channel-Design Decisions Channel-Management Decisions Channel Dynamics Industrial Marketing Channels Customers’ Desired Service Levels Lot size Waiting time Spatial convenience Product variety Service backup Causes of Channel Conflict Incompatibility Difference in Perception Dependence Legal Ethical Issues in Channel Relations Exclusive Dealing Exclusive Territories Tying Agreements Dealers’ Rights Review Work Performed by Marketing Channels Channel-Design Decisions Channel-Management Decisions Channel Dynamics * ?2000 Prentice Hall * How a Distributor Reduces theNumber of Channel Transactions = Customer = Manufacturer A. Number of contacts without a distributor M x C = 3 X 3 = 9 1 3 2 4 5 6 7 8 9 How a Distributor Reduces theNumber of Channel Transactions = Distributor = Customer = Manufacturer B. Number of contacts with a distributor M x C = 3 + 3 = 6 Store 1 2 3 4 5 6 Distribution Channel Functions Ordering Payments Communication Transfer Negotiation Financing Risk Taking Physical Distribution Information Consumer Marketing Channels Wholesaler Jobber Retailer Consumer ? ? ? ? Consumer Retailer Consumer ? Manufacturer 0-level channel Wholesaler Retailer Consumer ? ? Mfg 2-level channel Mfg 3-level channel 1-level channel Manufacturer Industrial distributors Manufacturer Consumer Manufacturer’s representative Manufacturer’s sales branch Selling costs (dollars) Level of sales (dollars) Break-Even Cost Chart Company sales force Manufacturer’s sales agency SB Channel Management Decisions Selecting FEEDBACK Motivating Training Evaluating Types of Vertical Marketing Systems Corporate Common Ownership at Different Levels of the Channel Contractual Contractual Agreement Among Channel Members Administered Leadership is Assumed by One or a Few Dominant Members Conventional Distribution Channel vs. Vertical Marketing Systems Vertical marketing channel Manufacturer Retailer Conventional marketing channel Consumer Manufact
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