AEM 240 Ch. 13 Outline

AEM 240 Ch. 13 Outline - NATURE AND IMPORTANCE OF MARKETING...

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NATURE AND IMPORTANCE OF MARKETING CHANNELS What is a Marketing Channel of Distribution? Marketing channels consist of individuals/firms involved in the process of making a  product or service available for use o Makes possible the flow of products through a producer to intermediaries to  buyers Value Created by Intermediaries Intermediaries: o Middleman: Any intermediary between manufacturers and end-user markets o Agent/broker: Any intermediary w/ legal authority to act on behalf of the  manufacturer o Wholesaler: An intermediary who sells to other intermediaries o Retailer: An intermediary who sells to consumers Type of Intermediary functions: o Transactional function  Buying-  Purchasing products for resale or as an agent for supply of a  product Selling- Contacting potential customers, promoting products, seeking  orders Risk Taking- Assuming business risks in the ownership of inventory that  can become obsolete or deteriorate o Logistical function (preparing/getting a product to buyers):  Assorting: Creating product assortments from several sources to serve  customers
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Storing: Assembling/protecting products at convenient locations to offer better customer service Sorting: Purchasing large quantities and breaking it into smaller amounts Transporting: Physically moving a product to consumers o Facilitating Function: Financing: Extending credit to consumers Grading: Inspecting, testing, or judging products and assigning quality grades Marketing info/research: Providing info to customers and suppliers, including competitive conditions and trends Consumers benefit from intermediaries because they create value CHANNEL STRUCTURE AND ORGANIZATION Marketing Channels for b2c goods Direct Channel is when the producer and ultimate consumer are next to each other in the marketing channel (no intermediaries) Indirect channels are intermediary channels o The first intermediary added (Channel B) is usually a retailer which is common when the retailer is large and can buy in large quantities from a producer, or when the cost of inventory makes it too expensive to use a wholesaler This is common among cars because there are so many variations in would be impossible for a wholesaler to have all models o The second intermediary added (Channel C) is usually a wholesaler; which is common for a low-cost, low-unit value items which are frequently purchased by consumers (candy, magazines, etc)
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o The third intermediary added (Channel D), the most indirect channel, is when  there are small manufacturers and many small retailers (ex. jewelry) Marketing Channels for b2b goods B2b channels are typically shorter and rely on one intermediary or none because  business users are fewer in number, concentrated geographically, and buy in larger 
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AEM 240 Ch. 13 Outline - NATURE AND IMPORTANCE OF MARKETING...

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