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Canada (158,081)
BUS 343 (120)
Jason Ho (70)
Chapter 10

Marketing: Real People, Real Decision (3rd Edition): Chapter 10

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Simon Fraser University
Business Administration
BUS 343
Jason Ho

Chapter 10: Channels and Supply Chain Strategy Channels of Distribution: The Final Frontier Channels of distributions may be the only one of the four Ps for which there is an opportunity for sustainable competitive advantage Channel means making goods and services available where and when customers need and want them The Importance of Distribution: You Cant Sell What isnt There Structure channel so that it can adapt rapidly to competitive advantage What is a Distribution Channel Channel of distribution the series of firms or individuals that facilitates the movement of a product form the producer to the final customer Include an organized network of manufacturers, wholesalers, and retailers that develop relationships and work to ether to make products conveniently available to buyers Direct channel a producer and a customer Indirect channel ones that contain channel intermediaries o Firms or individuals such as wholesalers, agents, brokers, and retailers that help move a product from the producer to the consumer or business user Channel Objectives First step in deciding on a distribution plan o Develop appropriate objectives that support the organizations overall marketing goals In general overall objective of any distribution planning is to make a firms product available when, where, and in the quantities customers want and need at a minimum cost Evaluating the Environment www.notesolution.com Marketers must consider internal and external environments Organization must examine such issues: o Ability to create distribution channels o What channel intermediaries are available o Ability of customer to access these intermediaries etc. Studying competitors distribution strategies, marketers can learn success and failure Choosing a Distribution System Planning distribution strategies means making at least three decisions o Number of levels in the distribution channel o What type of channel relationship (conventional, vertical, or horizontal) o Distribution intensity or the number of intermediaries at each level of the channel Conventional, Vertical and Horizontal Marketing System Systems take form in conventional, vertical, and horizontal Conventional marketing system a multiple level distribution channel in which channel members work independently of one another o Relationship is limited to buying and selling to one another o Seeks benefit with little concern for other channel members o All members of the channel are working for the same goals build demand, reduce costs, and improve customer satisfaction o Channel members know that its in everyones best interest to treat other channel members fairly Vertical marketing system (VMS) a channel of distribution in which there is a cooperation among members at the manufacturing, wholesaling, and retailing level o Work together and depend on each other like links in a chain o Members share information and provide services to other members recognizing that such coordination makes everyone more successful Administered VMS o Channel members remain independent but voluntarily agree to work together Corporate VMS o Firms have ownership control of some or all of a distribution channel o Buys agent companies Contractual VMS o Cooperation is enforced by contracts, legal agreements that spell out each members rights and responsibilities and how they will cooperate Wholesaler VMS o Wholesaler get retailers to work together under their leadership in a voluntary chain o Use common name, cooperate in advertising and other promotion, and eve develop their own private label products Retailer cooperative o Group of retailers that has established a wholesaling operation to help them compete more effectively with the large chains www.notesolution.como Each retailer owns shares in wholesaler operation and obligated to purchase a certain percentage of inventory from the cooperative operation Franchise organizations o Type of contractual VMS o Channel cooperation explicitly defined and strictly enforced through contractual arrangements o Franchiser provides a variety of services for the franchisee in return for percentage of revenue o From manufacturers perspective, franchising a business is a way to develop a widespread product distribution with minimal financial risk, while maintaining control over product quality Horizontal marketing system (HMS) an arrangement within a channel of distribution in which two or more firms at the same channel level work together for a common purpose Functions of Distribution Channels Channels that include one or more intermediaries can often accomplish certain distribution functions more effectively and efficiently than can a single organization Channels provide form, time, place, information, and possession utility for customers Utilities in marketing and distribution measures the ability to a good or service to satisfy a customers needs or wants Form Utility all activities used to change the appearance or composition of a good or ser
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