Professional Documents
Culture Documents
It depends on the service outputs desired by the target market & the
channels transactions costs. The company must search for the
channel alternative that promises the most long-run profitability.
2. Number of intermediaries.
Exclusive distribution
Selective distribution
Intensive distribution
3. Terms & responsibilities of channel members
The producer must determine the rights & responsibilities of the
participating channel members, making sure that each channel
member is treated respectfully & given the opportunity to be
profitable.
Channel-Management Decisions
After a company has chosen a channel alternative, individual
intermediaries must be selected, motivated & evaluated.
Channel Dynamics
Conventional marketing channel
Comprises an independent producer, wholesaler(s) & retailer(s).
Each is a separate entity.
No channel member has complete or substantial control over the
other members.
Vertical Marketing Systems
1. Producer, wholesaler(s) & retailer(s) act as a unified system.
2. They all cooperate.
3. Can be dominated by any of the three members of the system.
4. It arose as a result of strong channel members attempts to control
channel behavior & eliminate the conflict that results when
independent channel members pursue their own objectives.
5. Has become the dominant mode of distribution in the U.S. consumer
marketplace.
Three types of VMS:
1. Corporate VMS
Combines successive stages of production & distribution under single
ownership. (Sears).
2. Administered VMS
Coordinates successive stages of production & distribution through
the size & power of one of members (Kodak, Gillete, P&G)
3. Contractual VMS
Independent firms at different levels of production & distribution
integrating their programs on a contractual basis to obtain more
economies &/or sales impact than they could achieve alone. 3 types:
o Wholesaler-sponsored voluntary chains
o Retailer cooperatives
o Franchise organizations
Horizontal Marketing Systems
Two or more unrelated companies put together resources or programs to
exploit an emerging marketing opportunity.
Multichannel Marketing Systems
A single firm uses two or more marketing channels to reach one or more
customer segments. By adding more channels, companies can gain 3
important benefits: increased market coverage, lower channel cost, more
customized selling.