Chapter 15 Managing Marketing Channels and Wholesaling

Chapter 15 Managing Marketing Channels and Wholesaling -...

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Chapter 15 Managing Marketing Channels and Wholesaling NATURE AND IMPORTANCE OF MARKETING CHANNELS 1. What is a marketing channel of distribution? a. Marketing channel- consists of individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users 2. Value created by intermediaries a. Intermediaries make selling goods and services more efficient because they minimize the number of sales contacts necessary to reach a target market b. Functions performed by intermediaries: i. Transactional function-buying, selling, and risk taking because they stock merchandise in anticipation of sales ii. Logistical function- evident in the gathering, sorting, and dispersing of products iii. Facilitating functions- assist producers in making goods and services more attractive to buyers 1. channel members often negotiate about which function they will perform c. Consumer benefits from intermediaries i. Create value fro consumers through the four utilities: 1. time 2. place 3. form 4. possession d. Terms used for marketing intermediaries i. Middleman-any intermediary between manufacturer and end-user markets ii. Agent or broker- intermediary with legal authority to act on behalf of the manufacturer iii. Wholesaler- intermediary who sells to other intermediaries, usually to retailers; usually applies to consumer markets iv. Retailer- intermediary who sells to consumers v. Distributor- imprecise term, usually used to describe intermediaries who perform a variety of distribution functions, including selling, maintaining inventories, extending credit, and so on; a more common term in business markets but may also be used to refer wholesalers vi. Dealer- an even more imprecise term that can mean the mean the same as distributor, retailer, wholesaler, and so forth CHANNEL STRUCTURE AND ORGANIZATION 1. Marketing Channels for consumer goods and services a. Channel A- represents a direct channel because a producer and ultimate consumers deal directly with each other
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i. Ex. Door-to-door salespeople ii. Producers must perform all channel functions b. Channel B- represents an indirect channel i. Most common when a 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 ii. Ex. Care dealer, sears, home depot c. Channel C- represents an indirect channel i. Most common for low-cost, low-unit value items that are frequently purchased by consumers ii. Adds wholesaler iii. Ex. Candy d. Channel D- represents an indirect channel i. Employed when there are many small manufacturers and many small retailers, and an agent is used to help coordinate a large supply of the product 2. Marketing channels for business goods and services *business channels typically are shorter and rely on one intermediary or none at all because business users are fewer in number, tend to be more concentrated geographically, and buy in larger quantities a. Channel A- a direct channel
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Chapter 15 Managing Marketing Channels and Wholesaling -...

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