Chapter 11: Marketing Channels Flashcards
Marketing channel–>
A set of interdependent organization that ease the transfer of ownership as products move from producer to business user or consumer
Facilitate the physical movement of goods through the supply chain, represent the “place” element in the marketing mix
• Supply chain
Is the connected chain of all business entities, both internal and external to the company, that perform or support the marketing channel functions.
Specialization and division of labour
- Breaking down a complex task into smaller, simpler ones and allocating them to specialists will create:
- Creates greater efficiency
- Provides lower costs
- Achieves economies of scale (efficient equipment producing large quantities)
- Aids producers who lack resources to market directly (motivation, financing and enterprise)
- Builds good relationships with customers
Overcoming discrepancies
- dicrepancy of quantity
- discrepancy of assorment
- a temporal discrepancy
- spatial discrepancy
Overcoming Discrepancies
• Marketing channels help overcome discrepancies of quantity, assortment, time and space created by economies of scale in production.
○ Discrepancy of quantity–> the difference between the amount of a product produced and the amount an end user wants to buy
§ Marketing channels counteract by storing and distributing in desired amounts
○ Discrepancy of assortment–>
occurs when a consumer does not have all the items needed to receive full satisfaction of the product.
§ Marketing channels assemble in one place many products necessary to complete the consumers needed assortment.
○ A temporal discrepancy
§ Created when a product is produced but a consumer is not ready to buy it.
□ Marketing channels overcome temporal discrepancies by maintaining inventories in anticipation of demand.
○ Spatial discrepancy
§ Markets are scattered over large geographic area.
Marketing channels make products available in locations convenient to consumers.
Providing contact efficient
The third need fulfilled by marketing channels is that they provide contact efficient. Marketing channels provide this by reducing the number of locations that buyers have to visit to complete their shopping.
Channels provide :
- specialization and division of labour
- overcome discrepancies
- providing contanct efficiency
Channel functions performed by intermediaries
- Transactional functions
- Logistical functions
- Facilitating Functions
- Transactional functions
- Contacting and promotion–> contacting potential customers, promoting products, and soliciting orders
- Negotiating –> determining how many goods or services to buy and sell, type of transportation to use, when to deliver, and method and timing of payment
- Risk taking–>assuming the risk of owning inventory
- Logistical functions –
the process of strategically managing the efficient flow and storage of raw materials, in-process inventory, and finished goods from point of origin to point of consumption.
• Physical distribution–> transporting and sorting goods to overcome temporal and spatial discrepancies
• Storing –> maintaining inventories and protecting goods
• Sorting –> overcoming discrepancies of quantity and assortment by sorting out, accumulating, allocating, and assorting.
- Facilitating Functions
- Researching–> Gathering information about other channel members and consumers
- Financing–> extending credit and other financial services to facilitate the flow of goods through the channel to the final consumer
Channels for Consumer Products
- Direct channel - to sell directly to consumers (telemarketing, mail-order, catalogue shopping )
- Producer–>consumers
- Retailer channel
- Producer–> retailers –> consumers
- Wholesaler Channel
- Producer–>wholesalers–> retailers–>consumers
- Agent/broker channel
- Producer–> agents or brokers–> wholesalers–> retailers–>consumers
