Lecture Basic Marketing: A global managerial approach - Chapter 11: Place and development of channel systems
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Chapter 11:
Place and
Development of
Channel Systems
For use only with Shapiro, Wong, Perreault, and McCarthy text
Copyright © 2002 McGraw-Hill Ryerson Limited
Exchange and Marketing
Pots
Hats
Hoes
Baskets
In very basic economic
systems, each seller
must meet directly with
each buyer in order to
exchange something of
value. As needs
increase, the number of
exchanges can soon
become unmanageable
for one person.
Knives
Ten exchanges are required
when a central market is not used
Exhibit 112 (A)
112
For use only with Shapiro, Wong, Perreault, and McCarthy text
Copyright © 2002 McGraw-Hill Ryerson Limited
Marketing Facilitates Production
and Consumption
Production Sector
Specialization and division of labour = heterogeneous supply capabilities
Spatial Separation
Discrepancies of Quantity
Marketing
needed
to overcome
discrepancies
and
separations
Separation in Time
Separation of Information
Separation in Values
Discrepancies of Assortment
Separation of Ownership
Consumption Sector
Heterogeneous demand for form, task, time, place, and possession utility
Exhibit 113
113
For use only with Shapiro, Wong, Perreault, and McCarthy text
Copyright © 2002 McGraw-Hill Ryerson Limited
Model of Market-Directed
Macro-Marketing System
Many Individual Producers
intermediaries
Facilitators
Perform universal marketing functions
Monitoring by government(s)
and public interest groups
To overcome discrepancies and
separations
To create utility and direct flow of
need-satisfying goods and services
Exhibit 114
114
Many Individual Consumers
For use only with Shapiro, Wong, Perreault, and McCarthy text
Copyright © 2002 McGraw-Hill Ryerson Limited
Regrouping Activities
Accumulating
Accumulating
Sorting
Sorting
115
BulkBulkBreaking
Breaking
Assorting
Assorting
For use only with Shapiro, Wong, Perreault, and McCarthy text
Copyright © 2002 McGraw-Hill Ryerson Limited
Strategic Decision Areas in Place
Place objectives
Customer
service
level desired
Type of
channel
Direct
Degree of market
exposure desired
116
Indirect
Type of
physical distribution
facilities needed
Intermediaries/
facilitators needed
How to manage
channels
For use only with Shapiro, Wong, Perreault, and McCarthy text
Copyright © 2002 McGraw-Hill Ryerson Limited
Why a Firm May Want to Use Direct Channels
Greater
GreaterControl
Control
Lower
LowerCost
Cost
Value
ValueAdded
AddedSubsequent
Subsequentto
to
Production
Process
Production Process
Direct
DirectContact
Contactwith
with
Customer
CustomerNeeds
Needs
Some
Some
Reasons
Reasons
for
for Choosing
Choosing
Direct
Direct Channels
Channels
117
Quicker
QuickerResponse
Responseor
or
Change
Changein
inMarketing
MarketingMix
Mix
Suitable
SuitableIntermediaries
Intermediaries
Not
NotAvailable
Available
For use only with Shapiro, Wong, Perreault, and McCarthy text
Copyright © 2002 McGraw-Hill Ryerson Limited
Managing Channel Relationships
Choosing the Type of
Relationship
Whole-Channel ProductMarket Commitment
Key
Issues in
Channel
Management
Conflict Handling
Common Objectives
Role of Channel Captain
118
For use only with Shapiro, Wong, Perreault, and McCarthy text
Copyright © 2002 McGraw-Hill Ryerson Limited
Vertical Marketing Systems
Type of channel
Characteristics
Vertical marketing systems
Traditional
Administered
Contractual
Corporate
Little or
none
Some to
good
Fairly good
to good
Complete
Control maintained
by
None
Economic
power and
leadership
Contracts
One
company
ownership
Examples
Typical
channel of
“independents”
General
Electric
McDonald’s
Florsheim
Amount of
cooperation
Exhibit 115
119
For use only with Shapiro, Wong, Perreault, and McCarthy text
Copyright © 2002 McGraw-Hill Ryerson Limited
Market Exposure
Intensive
What Market
Exposure
Fits the
Marketing
Objectives
Selective
Exclusive
1110
For use only with Shapiro, Wong, Perreault, and McCarthy text
Copyright © 2002 McGraw-Hill Ryerson Limited
