Copyright © 2012 Pearson Canada Inc.11 - 1 Marketing Channels: Retailing and Wholesaling Chapter 11

Copyright © 2012 Pearson Canada Inc.11 - 1

Marketing Channels:

Retailing and Wholesaling

Chapter 11


1. Explain why companies use marketing channels, and describe the functions channels perform

2. Explain how channels are organized, designed, and managed

3. Define retailing and the major types of retailers, and explain the role of retailers in the distribution channel

4. Describe the major types of wholesalers and their marketing decisions

5. Discuss the nature and importance of marketing logistics and integrated supply chain management

Previewing the Concepts


Supply Chain

• Producing and making products available to buyers requires building relationships with supply chain partners:– Upstream: Firms that supply the raw

materials, components, parts, and other elements necessary to create a good

– Downstream: partners that link the firm to the customer (wholesalers & retailers)


Nature and Importance of Marketing Channels

• Marketing (or distribution) channel:– A set of interdependent organizations that

help make a product or service available for use or consumption by the consumer or business users


Marketing Channels

• Direct Channels:

• Indirect Channels:


Channel Behavior and Organization

• The channel will be most effective when:

• Channel conflict can occur:– Horizontally (e.g., retailer to retailer)– Vertically (e.g., wholesaler to retailer)



• Goodyear created channel conflict by selling through mass-merchant retailers:



• Conventional distribution channel compared to vertical marketing system:


Channel Organization

• Types of vertical marketing systems:– Corporate VMS

– Contractual VMS

– Administered VMS



• Horizontal marketing systems:– Two or more companies at one level join

together to follow a new marketing opportunity


Distribution

• Intensive

• Exclusive

• Selective


Retailing

– All activities involved in selling products or services directly to final consumers for their personal, non-business use


Types of Retailers

• Major types of retailers:– Specialty stores– Department stores– Supermarkets– Convenience stores– Discount stores– Off-price retailers– Superstores


Types of Retailers

• Retailers can be classified by the amount of service they offer: – Self-service retailers

– Limited-service retailers

– Full-service retailers


Types of Retailers

• Retailers can be classified by the prices they charge:– Low price retailers include:

• Discount stores

• Off-price retailers

• Factory outlets

• Warehouse clubs


Retail Trends and Developments

• New retail forms, but shorter retail life cycles (wheel of retailing)

• Slowed economy and consumer spending

• Growth of online retailing

• Retail technologies providing competitive tools


Retail Trends and Developments

• The wheel of retailing:


Wholesaling

– All activities involved in selling goods and services to those buying for resale or business use

• Wholesalers add value for producers by performing one or more channel functions


Types of Wholesalers

• Merchant wholesaler– Drop shippers– Rack jobbers

• Brokers and agents


Marketing Logistics

• Marketing logistics (physical distribution):– Planning, implementing, and controlling the

physical flow of materials, final goods, and related information from points of origin to points of consumption to meet customer requirements at a profit

• Involves supply chain management


Marketing Logistics

• Greater emphasis is placed on logistics:– gain a competitive advantage– lower costs (20% of price)– Increased product variety– information technology created distribution

efficiency– environmental and sustainability efforts


Transportation as Valuecost of transport / selling price

55%gravel

42%coal

38%cabbage

20%iron ore

8%processed food

6%plastic

3%electronics

1%drugs

4%factory machinery


Transport Modes

truck

rail water air pipe

cost hi med v lo v hi lo

speed fast med v slow

v fast slow

# locations served v hi hi lo hi v lo

ability to handle variety of goods

hi hi v hi lo v lo

frequency hi lo v lo hi med

time dependability hi med med hi hi


Physical Distribution Issues

• “logistics”

– intermodal

http://www.containerhandbuch.de/chb_e/stra/index.html?/chb_e/stra/stra_01_01_00.html


Distribution

• “logistics”

– intermodal


Integrated Logistics Management

• Integrated logistics management:– Emphasizes teamwork, inside the company

and among the marketing channel partners, to maximize the performance of the entire distribution system

• Requires:– Cross-functional teamwork in the company– Building logistics partnerships– Outsourcing to third-party logistics providers

Documents

Copyright © 2012 Pearson Canada Inc.11 - 1 Marketing Channels: Retailing and Wholesaling Chapter 11