Download Channels of Distribution Chapter 14 McGraw

14-1
Chapter 14
Channels of
Distribution
14-2
McGraw-Hill/Irwin
Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter Goals
• Nature and importance of middlemen and distribution
channels
• Direct sales to retailers
• Decisions in designing a channel
• Major channels for goods and services
• Vertical marketing systems
• Choosing specific channels and middlemen
• Intensity of distribution
• Conflict and control within channels
• Legal considerations in channels
14-3
McGraw-Hill/Irwin
Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.
Middlemen
Middlemen
A business firm that
renders services directly
related to the sale/purchase
of a product as it flows through
from producer to consumer
You can eliminate middlemen, but not the
essential distribution activities they
perform
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Distribution Channels
DISTRIBUTION CHANNELS
People and firms involved
in the transfer of title to a product
as the product moves from producer to
ultimate consumer or business user
Producers
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Middlemen
Final
Consumer
Or
Business
User
Middleman Activities
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Middleman Activities
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Major Channels of Distribution
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Vertical Marketing Systems
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Choice of Channels: Market
Type
of
Market
Geographic
concentration
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Number of
potential
customers
Order
size
Choice of Channels: Product
Perishability
Unit
Value
Technical
Nature
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Choice of Channels: Middleman
Services provided by
middlemen
Availability of desired
middlemen
Producer’s and
middlemen’s policies
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Choice of Channels: Company
Desire
for channel control
Services provided
by seller
Ability
of management
Financial resources
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Intensity of Distribution
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Conflict in Channels
Horizontal
Middlemen
of the same type
Retailer
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Retailer
Different types
of middlemen
on the same level
Retailer
Retailer
Conflict in Channels
Vertical
Producer
vs.
Wholesaler
Producer
vs.
Retailers
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Who Controls the Channels?
Expertise
Rewards
Sanctions
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Channel as Partnership
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Cooperation
Collaboration
Coordination
Relationship
Marketing
Legal Considerations
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Exclusive
dealing
Tying
contracts
Refusal
to deal
Exclusive
territory
Key Terms and Concepts

Middlemen

Contractual vertical marketing
system

Merchant middlemen

Agent middlemen

Administered vertical marketing
system

Disintermediation


Intensity of distribution
Distribution channel


Intensive distribution
Gray marketing


Selective distribution
Direct distribution


Exclusive distribution
Indirect distribution


Channel conflict
Multiple distribution channels


Chargeback
Vertical marketing system


Horizontal conflict
Corporate vertical marketing
system

Scrambled merchandising
14-20
McGraw-Hill/Irwin
Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.
Key Terms and Concepts

Vertical conflict

Slotting fee

Channel control

Channel power

Exclusive dealing

Tying contract

Refusal to deal

Exclusive-territory policy
14-21
McGraw-Hill/Irwin
Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.