Channel Behaviour

and Organization
Group 8
Nguyn Tho Vn
Hong Minh Ngc
Phng Tho
L Thu Khnh Linh
Nguyn Hng Giang

Channel Behavior
The channel will be most effective when:
Each member is assigned tasks it can do best
All members cooperate to attain overall channel
goals
The success of individual channel members
depends on the overall channels success

Channel Behavior
Horizontal conflict occurs among firms at the
same level of the channel (e.g., between
different dealers of the same brand)
Vertical conflict occurs between different
levels of the same channel (e.g., between a
brand and its franchisee)

Channel Conflict
Disagreements among
marketing channel
members on goals,
roles, and rewards
who should do what
and for what rewards

In recent years, Burger King has had a
steady stream of conflicts with its
franchised dealers over everything from
advertising content to the price of its
cheeseburgers

Conventional Distribution
Channel

A channel consisting of one or more
independent producers, wholesalers, and
retailers, each a separate business seeking to
maximize its own profits, perhaps even at the
expense of profits for the system as a whole

Vertical Marketing system
(VMS)

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

Comparison of Conventional
Distribution Channel with Vertical
Marketing System
Types of Vertical Marketing
Systems

Corporate VMS
A vertical marketing system that combines
successive stages of production and distribution
under single ownershipchannel leadership is
established through common ownership

Examples for
Corporate VMS
Types of Vertical Marketing
Systems
Contractual VMS
A vertical marketing system in which
independent firms at different levels of
production and distribution jointogether
through contracts
Franchising is a common form of a contractual
VMS.
3 types of Franchising
Ford - manufacturer-sponsored retailer
franchise system
3 types of Franchising
Coca Cola
Manufacturer-
sponsored
wholesaler franchise
system
3 types of Franchising
Burger King
Service-firm-sponsored
retailer franchise
system
Types of Vertical Marketing
Systems
Administered VMS
A vertical marketing
system that coordinates
successive stages of
production and
distribution through the
size and power of one of
the parties

An example of this type of system could
include a large retailer such as Wal-Mart
dictating conditions to smaller product
makers, such as producers of a generic
type of laundry detergent.

Horizontal Marketing System
Two or more companies
at one level join
together to follow a
new marketing
opportunity

McDonalds now places express
versions of their stores in Walmart
stores

Multichannel Distribution
System
When a single firm sets
up two or more
marketing channels to
reach one or more
customer segments, it is
known as Multichannel
Distribution System
Multichannel Distribution
System
Advantages
Can approach more
customer segments
Expand sales and marketing
coverage
Help tailor its products and
services to specific needs of
diverse customer segments
Disadvantages
Hard to control
Can generate channel
conflicts

CHANGING CHANNEL
ORGANIZATION
Disintermediation
Occurs when
product and
service producers
cut out
intermediaries or
displace traditional
resellers with
radical new types
of intermediaries

Avoiding disintermediation problems:
Ebay.vn website provides detailed product
information refers them to its resellers Web
sites and stores

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