Textbook Notes (381,094)
CA (168,350)
UTSC (19,304)
MGM (268)
MGMA01H3 (184)
Chapter 15

Chapter 15

9 Pages
47 Views

Department
Management (MGM)
Course Code
MGMA01H3
Professor
Ingrid L.Stefanovic

This preview shows pages 1-3. Sign up to view the full 9 pages of the document.
INTRODUCTION
Adding more intermediaries to the distribution channel can make distribution more
efficient than selling direct
Marketing channels create time, place, and ownership utility in a direct way
Products if the highest quality will fail to generate adequate sales unless it is delivered to
the right place, at the right time, and with appropriate legal requirements
Distribution channels (marketing channels) are the paths that goods – and title to these
goods – follow from producer to consumer
oProvides purchasers with a convenient means of obtaining the products they want
to buy
Marketing intermediary is a business firm operating between the producer and the
consumer or business purchaser
Wholesaling is the activities of intermediaries who sell to retailers, other wholesalers,
and business users but not in significant amounts to ultimate consumers
Confusion can result from the practices of some firms that operate both wholesaling and
retailing operations
Also another source of confusion is the misleading practice of some retailers who claim
to be wholesalers
Retailers is a store that sells products purchased by individuals for their own use and not
for resale
THE ROLE OF DISTRIBUTION CHANNELS IN MARKETING
STRATEGY
Distribution Channels Perform Important Functions
Facilitating the exchange process
As market economies grew, the exchange process itself became complicated
With more producers and more potential buyers, intermediaries came into existence to
facilitate transactions by cutting down the number of marketplace contacts
Sorting to alleviate discrepancies in assortment
A producer tends to maximize the quantity of a limited line of products
The buyer needs a minimum quantity of a wide selection of alternatives
Sorting is the process that alleviates discrepancies in assortment by reallocating the
outputs of various producers into assortments desired by individual purchasers
Standardizing transactions
Distribution channels standardize exchange transactions in terms of the product, such as
grading of apples into types and grades, and the transfer process itself
Holding inventories
Hold a minimum of inventories to take advantage of economies of scale in transporting
and to provide a buffer for small changes in demand
Assisting in the search process
www.notesolution.com
Buyers are searching for specific products and services to fill their needs, while sellers are
attempting to find what consumers want
Transporting materials and finished products
Storing products in convenient locations for shipment to wholesale and retail
establishments allows firms to embody time utility in the product
Customer satisfaction depends heavily on the reliable movement of products to ensure
their availability
TYPES OF DISTRIBUTION CHANNELS
No one marketing demand channel is superior to all others
Marketing manager must therefore analyze alternative channels in light of consumer
needs and competitive restraints to determine the best channel or channels for the firms
products
Business good channels tend to be shorter than consumer goods channels
oGeographic concentration
oLimited number of buyers
oAbsence of retailers from the chain
Service channels also tend to be short
oIntangibility of services
oNeed to maintain personal relationships in the channel
Direct Channel
Less than 5% of all consumer goods are candidates for the producer-to-consumer channel
oTherefore, although simple, not necessarily the best
Direct channels are more important in the business goods market, where most major
installations and accessory equipment – and many of the fabricated parts and raw
materials - are marketed through direct contacts between producer and user
One-Step Channel (Consumer Goods)
It has taken the place of the traditional channel
oBeing used more, and more
Goods move from producer to retailer to consumer
Two-Step Channel (Consumer)
The traditional market channel for consumer goods is from producer to wholesaler to
retailer to user
The wholesalers sales force is responsible for reaching the market with the producers
output
Multistep Channel (Consumer)
The longest channel is from producer to agent to wholesale to retailer to consumer
oProducts are produced by a large number of small companies, a unique
intermediary appears to form the basic function of brining the buyer and seller
together
www.notesolution.com
oAgents are a wholesaling intermediary that differs from the typical wholesaler in
that the agent does not take title to the goods
Represent the producer or the regular wholesaler in seeking a market for
the producers output or in locating a source of supply for the buyer
Multistep Channel (Business Goods)
This channel consists of producer to agent to wholesaler to industrial user
The agent wholesaling intermediary is a company that provides an independent sales
force for contacting large, scattered wholesalers and some key business buyers
One-Step (Agent) Channel (Business)
Merchant wholesaler is a wholesaler who takes title to the products carried
when unit sale small, user merchant wholesaler
when unit sale is large, the producer to agent to business channel may be employed
One-Step (Wholesaler) Channel (Business)
Industrial distributer is a wholesaler that operates in the business goods market and
typically handles small accessory equipment and operating supplies
Direct Channel (Services)
Marketer of services does no often have to worry about storage, transportation, and
inventory control
Shorter channels, often direct from service provider to consumer or business user are
typically used
One-Step Channel (Services)
When service providers use marketing intermediaries to reach consumers or business
users, these are usually agents or brokers
A Special Note on Channel Strategy for Consumer Service
A dominant reason for patronizing many consumer services is convenient location
Multiple Channels
Multiple channels are used when the same product is marketed through several channels
as well as both to the ultimate consumer and to business users
For example, firestone tires are marketed
oDirectly to general motors
oThrough firestone stores
oThrough franchised firestone outlets
oFrom the factory to tire jobbers to retail gas stations
Reverse Channels
Reverse Channels are the paths goods follow from consumer to manufacturer or to
marketing intermediaries
oIncrease in importance as raw materials become more expensive, and as laws are
passed
For recycling to succeed
www.notesolution.com

Loved by over 2.2 million students

Over 90% improved by at least one letter grade.

Leah — University of Toronto

OneClass has been such a huge help in my studies at UofT especially since I am a transfer student. OneClass is the study buddy I never had before and definitely gives me the extra push to get from a B to an A!

Leah — University of Toronto
Saarim — University of Michigan

Balancing social life With academics can be difficult, that is why I'm so glad that OneClass is out there where I can find the top notes for all of my classes. Now I can be the all-star student I want to be.

Saarim — University of Michigan
Jenna — University of Wisconsin

As a college student living on a college budget, I love how easy it is to earn gift cards just by submitting my notes.

Jenna — University of Wisconsin
Anne — University of California

OneClass has allowed me to catch up with my most difficult course! #lifesaver

Anne — University of California
Description
INTRODUCTION Adding more intermediaries to the distribution channel can make distribution more efficient than selling direct Marketing channels create time, place, and ownership utility in a direct way Products if the highest quality will fail to generate adequate sales unless it is delivered to the right place, at the right time, and with appropriate legal requirements Distribution channels (marketing channels) are the paths that goods and title to these goods follow from producer to consumer o Provides purchasers with a convenient means of obtaining the products they want to buy Marketing intermediary is a business firm operating between the producer and the consumer or business purchaser Wholesaling is the activities of intermediaries who sell to retailers, other wholesalers, and business users but not in significant amounts to ultimate consumers Confusion can result from the practices of some firms that operate both wholesaling and retailing operations Also another source of confusion is the misleading practice of some retailers who claim to be wholesalers Retailers is a store that sells products purchased by individuals for their own use and not for resale THE ROLE OF DISTRIBUTION CHANNELS IN MARKETING STRATEGY Distribution Channels Perform Important Functions Facilitating the exchange process As market economies grew, the exchange process itself became complicated With more producers and more potential buyers, intermediaries came into existence to facilitate transactions by cutting down the number of marketplace contacts Sorting to alleviate discrepancies in assortment A producer tends to maximize the quantity of a limited line of products The buyer needs a minimum quantity of a wide selection of alternatives Sorting is the process that alleviates discrepancies in assortment by reallocating the outputs of various producers into assortments desired by individual purchasers Standardizing transactions Distribution channels standardize exchange transactions in terms of the product, such as grading of apples into types and grades, and the transfer process itself Holding inventories Hold a minimum of inventories to take advantage of economies of scale in transporting and to provide a buffer for small changes in demand Assisting in the search process www.notesolution.com
More Less
Unlock Document


Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

Unlock Document
You're Reading a Preview

Unlock to view full version

Unlock Document

Log In


OR

Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit