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Lecture 11

MARK301 Lecture Notes - Lecture 11: Rolex, Dollarama, Boston Pizza


Department
Marketing
Course Code
MARK301
Professor
Utku Akkoc
Lecture
11

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Marketing 301 Notes
Chapter 11
Marketing Channels
-products come through a supply chain
-Upstream Producers
-supply raw materials and components necessary to create products
-Downstream Producers
-link producers to the customer
-ex. Distributors, wholesalers or individual retailers (Target, Walmart, Superstore)
-Value Delivery Network
-producers, suppliers, distributors and customers who improve the performance of the entire
system in delivering customer value
-includes upstream producers and downstream marketing channel partners
Marketing Channel
-interdependent firms that make a product available for businesses or consumers
-channel decisions affect other marketing decisions
-ex. High (premium) prices - need exclusive distribution strategies
-ex. Rolex you can only purchase a Rolex at specific stores (Gemoro)
-ex. Low (affordable) prices products are widely available
-ex. Dollarama
-channel decisions can lead to competitive advantage
-ex. Target purchased all of the Zellers in Canada (Zellers was already struggling)
-Target stores had poor locations and as a result did not do well
Channel Members
-bridge time, place, and possession gaps that separate products from those who use them
-channel members carry a variety of products
-ex. Superstore carries more than one brand (a variety of products)
-channel members help reduce costs
-ex. Without a distributor, there are 9 transactions
-transactions are costly (the more transactions, the more time consuming and costly)
-channel partners (ex. Distributor) reduce the number of transactions (down to 6)
Various Marketing Channels
-Financing, Promotion, Information, After Sale Support, Physical Distribution, Matching and
Arranging, Negotiation, Contacts, Risk Taking
Channel Partners
-Retailers
-selling product to customer
-ex. grocery stores, restaurants, banks, gas stations, kiosks
-Wholesalers

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-buy in bulk and sell directly to retailers
-important for manufacturers that sell seasonal items
-ex. Merchant Wholesalers
-Drop Shippers
-take the order, pass it on to retailer, and ship the product to the customer
-ex. Amazon (although they sell some of their own products now)
-Rack Jobbers
-outdated
-selling product categories such as postcards, magazines, etc
-ex. found in gas stations, souvenir shops, grocery stores
-Brokers
-bring together buyers and sellers
-act as intermediaries
-ex. Travel website Priceline, expedia
-Agents
-work with a limited number of suppliers
-ex. Remax real estate agent
-informing buyers of listings and negotiating price
Channel Levels
-the number of intermediary levels indicates the length of a channel
-this will affect the price
Direct Marketing Channels
-deliver products to consumers directly from a producer
-most companies don’t use this (there’s typically an intermediary)
-ex. Avon
Indirect Marketing Channels
-involve intermediaries between the producer and consumer
-more expensive
Channel Conflict
-occurs when members of a channel have differing goals, roles or rewards
-ex. Samsung wants to distribute its own products but also works at different stores to sell their
products (ex. Bestbuy)
-selling their own products may put them at conflict with Bestbuy (may steal customers from
bestbuy)
Vertical Marketing System
-a channel structure in which producers, wholesalers and retailers act as a unified system
-one channel member owns the others, has contracts with them or has so much power
that they all cooperate
-centralized
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Vertical Marketing System Types
-Corporate
-combines successive stages of production and distribution under single ownership
-ex. Zara owns its own fabric manufacturing, they only sell their own products in their stores
-Contractual
-independent firms at different levels of production/distribution contract with each other
-brings together firms at different levels with contracts
-economies of scale, saving on production costs
-ex. Subway
-Administered
-coordinates successive stages of production and distribution, not through common ownership
or contractual ties
-administered, but through the size and power of one of the parties
-ex. PG obtains store support from retailers Superstore and Walmart
-Franchise
-Franchiser controls the franchisees
-royalty fees
-3 types:
-Manufacturer sponsored retailers (ex. Ford and it’s dealerships)
-Manufacturer sponsored wholesalers (ex. Coca Cola and it’s bottlers)
-Service firm sponsored (ex. Parent brand “Yum” sponsors KFC, Taco Bell, Pizza Hut) ***
Horizontal Marketing System
-two or more companies at one level join together to follow a new marketing opportunity
-join forces
-ex. Star Alliance collection of airlines, creates additional opportunities
-ex. Tim Hortons offering “on the go” coffee shops (ex. at gas stations)
Multichannel Marketing Systems
-a single firm sets up two or more marketing channels to reach one of more customer groups
-also called hybrid marketing channel system
-ex. Coach sells through their website, Coach store and department stores
Disintermediation
-product and service producers cut out traditional intermediaries or displace resellers with new
types of intermediaries
-fewer intermediaries
-ex. Hotels.com (less need for travel agency), easily can book a hotel through this website vs.
searching other websites for the best rate
-ex. Uber (less tax)
Marketing Channel Decisions
-selecting channel members
-managing and motivating channel members (give us shelf space, promote our products)
-evaluating channel members (are they performing as expected?)
-intensity of distribution
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