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ADM2320X summer 2008-ch 14 - Managing Marketing Channels...

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1 Managing Marketing Channels and Supply Chains Chapter 14
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2 Definition of Marketing Channel Individuals and firms involved in the process of making product or service available for use or consumption by consumers or industrial users
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3 Distribution Channel A series of firms or individuals that facilitates the movement of a product from producer to final customer Direct channel: Producer sells direct to customer using Catalogues, 800 numbers, Internet, Factory outlets Indirect channel: Producer sells to customer using one or more channel intermediaries such as wholesalers, agents, brokers, retailers
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4 Functions of distribution channels: benefits for consumers Channels provide time, place and ownership utility for customers Desired products are made available when, where and in the sizes and quantities that customers want them (the channel members coordinate their actions accordingly) Increases efficiency of the flow of goods from producer to customer (i.e supermarkets)
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5 Distribution Efficiencies Distribution channels reduce number of transactions necessary for goods to flow from many different manufacturers to large numbers of customers. Bulk breaking : wholesalers/retailers buy in bulk from producers and sell to many customers Create assortments of different products so that customers can buy products of many producers in one location (i.e. Wal-Mart)
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6 3 Functions Performed by Intermediaries Facilitating Financing; Grading; Marketing information and research; Warranties Repair & maintenance Export marketing, warehousing & distribution Transactional Buying; Selling; and Assuming risk Logistical Assorting; Storing; Sorting; and Transporting
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7 Composition & structure of channels Independent intermediaries Merchant wholesalers Merchandise agents & brokers Manufacturer-owned
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8 Independent intermediaries Not owned or controlled by any one manufacturer Merchant wholesalers take title to the goods (they assume risk/ownership; can set their own prices) Full service merchant wholesalers provide delivery, credit, repairs, advertising, market research, marketing, sales Rack jobbers own & maintain product display racks in retail stores Merchandise brokers connect buyers & sellers for a fee; never take title (ownership rests with seller)
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9 Manufacturers’ agents Independent Not supervised Paid a commission based on the sales price Not on salary Often paid part salary/part commission Under contract with producer Set sales territory Set commission scale Non-competition clause
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10 Selling agents Take on a producer’s whole line Not on salary Paid on commission Do not take title to products They control pricing, distribution & promotion of products Perform functions as full-service wholesalers
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11 Manufacturer-owned intermediaries Under control of the manufacturer Sales branches (carries inventory)
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