Chapter8SelectingandManagingMarketingChannelsUnrestricted2Part1TheNatureofMarketingChannels31.DefinitionofMarketingChannelMarketingchannelcanbeviewedassetsofinterdependentorganizationsinvolvedintheprocessofmakingaproductorserviceavailableforuseorconsumption453.HowaDistributorReducesthe

NumberofChannelTransactions=Distributor=Customer=ManufacturerB.NumberofcontactswithadistributorMxC=3+3=6Store12345664.DistributionChannelFunctionsOrderingPaymentsCommunicationTransferNegotiationFinancingRiskTakingPhysicalDistributionInformation75.ConsumerMarketingChannelsWholesalerJobberRetailerConsumerConsumerRetailerConsumerManufacturer0-levelchannelWholesalerRetailerConsumerMfg2-levelchannelMfg3-levelchannel1-levelchannelManufacturer8IndustrialdistributorsManufacturerConsumerManufacturer’srepresentativeManufacturer’ssalesbranch6.IndustrialMarketingChannels9Part2Channel-DesignDecisions101.Customers’DesiredServiceLevelsLotsizeWaitingtimeSpatialconvenienceProductvarietyServicebackup112.EstablishtheChannelObjectivesandConstraintsProductcharacteristicsmiddlemencharacteristicscompetitivecharacteristicscompanycharacteristicsenvironmentcharacteristics

123.IdentifyingtheMajorChannelAlternatives(1)Numberofintermediaries:--intensivedistribution--selectivedistribution--exclusivedistribution13(2)

TermsandResponsibilitiesofChannelMembersPricepolicyconditionofsaleterritorialrightmutualserviceandresponsibilities144.EvaluatingtheMajorChannelAlternativesEconomiccriteriacontrolcriteriaadaptivecriteria15Sellingcosts(dollars)Levelofsales(dollars)Break-EvenCostChartCompanysalesforceManufacturer’ssalesagencySB16Part3Channel-ManagementDecision17ChannelManagementDecisionsSelectingFEEDBACKMotivatingTrainingEvaluating18Part4ChannelDynamics191.TypesofVerticalMarketingSystemsCorporateCommonOwnershipatDifferentLevelsoftheChannelContractualContractualAgreementAmongChannelMembersAdministeredLeadershipisAssumedbyOneoraFewDominantMembers202.ConventionalDistributionChannelvs.VerticalMarketingSystemsVerticalmarketingchannelManufacturerRetailerConventionalmarketingchannelConsumerManufacturerConsumerRetailerWholesalerWholesaler21Part5Retailing221.NatureandImportanceofRetailingRetailingincludesalltheactivitiesinvolvedinsellinggoodsorservicesdirectlytofinalconsumersfortheirpersonal,nonbusinessuse.232.FourLevelsofRetailServiceSelf-serviceSelf-selectionLimited-serviceFull-service243.RetailPositioningMapBloomingdale’sKinneyShoeWal-MartTiffanyBroadNarrowBreadthofproductlineValueaddedLowHigh254.ClassificationOfRetailerTypesSpecialtyStoresDepartmentStoresSupermarketsConvenienceStoresOff-PriceRetailerSuperstoresCatalogShowroomWideVarietyofProductLinesi.e.Clothing,HomeFurnishings,&HouseholdItemsWideVarietyofFood,Laundry,&HouseholdProductsLimitedLineofHigh-TurnoverConvenienceGoodsInexpensive,Overruns,Irregulars,andLeftoverGoodsLargeAssortmentofRoutinelyPurchasedFood&NonfoodProducts,PlusServicesBroadSelection,FastTurnover,DiscountPricesNarrowProductLine,DeepAssortment

StoreType LengthandBreadthofProduct AssortmentDiscountStoresBroadProductLine,LowMargin,HighVolume265.TypesofNonStoreRetailingDirectSellingDirectMarketingBuyingServicesNonStoreRetailingAccountsforMoreThan12%ofAllConsumerPurchases,andistrendingup.AutomaticVending27LowPriceLowStatusLowMarginMidPriceMidStatusMidMarginHighPriceHighStatusHighMarginNewEntrants6.WheelofRetailing28Part6Wholesaling291.WholesalingWholesalingincludesallactivitiesinvolvedinsellinggoodsorservicestothosewhobuyforresalebusinessuse.302.WhyareWholesalersUsed?WholesalerFunctionsManagementServices&AdviceSellingandPromotingMarketInformationBuyingandAssortmentBuildingRiskBearingBulkBreakingTransportingFinancingWarehousing313.GrowthandTypesofWholesalingMerchantwholesalerbrokersandagentsmanufactures’andretailer’branchesandofficesmiscellaneouswholesalers32Part7PhysicalDistribution331.NatureofPhysical

DistributionPhysicaldistributioninvolvesplanning,implementing,andcontrollingthephysicalflowsofmaterialsandfinalgoodsfrompointsoforigintopointsofusetomeetcustomerneedsataprofit342.GoalsoftheLogisticsSystem

ProvideaTargetedLevelofCustomerServiceat theLeastCost.MaximizeProfits,NotSales.HigherDistributionCosts/ HigherCustomerServiceLevelsLowerDistributionCosts/ LowerCustomerServiceLevels 35InventoryWhentoorderHowmuchtoorderJust-in-timeCostsMinimizeCostsofAttainingLogisticsObjectives

WarehousingStorageDistributionOrderProcessingSubmittedProcessedShippedLogisticsFunctionsTransportationWater,Truck, Rail,Pipeline&Air3.LogisticsSystems36RailNation’slargestcarrier,cost-effectiveforshippingbulkproducts,piggybackTruckFlexibleinrouting×chedules,efficientforshort-haulsofhighvaluegoodsWaterLowcostforshippingbulky,low-valuegoods,slowestformPipelineShippetroleum,naturalgas,andchemicalsfromsourcestomarketsAirHighcost,idealwhenspeedisneededortoshiphigh-value,low-bulkitems4.T