Channel Integration
Conventional/Traditional Channel
Independent members, loose integration. Each a separate profit making business.
What is a Distribution Channel?
Institutions that provide the means by which the firm moves the goods and services it produces to users.
Ex. Manufacturer, wholesaler, retailer, customer.
Limited number of retail outlets
Selective
Ex. Chick-ful-e
Transportation and storage
Physical movement
Vertical Conflict
Dispute over profit distribution
Ex. The top boss and the lower guy get into it about money. Same company, different levels.
Channel coordination occurs through formal/legal agreements amoung channel members
Contractual VMS
Ex. bound together through contracts. Franchises.
Long Channel
Man, Whole1, Whole2, Retailer, Customer
Maximum Retail Exposure
Intensive
Ex. McDonalds
Breaking Bulk
Truckloads to smaller pallets
Merchant Intermediaries
Wholesalers and Retailers that operates between producers and consumers (Middle Man)
Channel Captain
A dominant member of the channel who sets the rules/roles/expectations for the other members of the channel.
Ex. 800 pound gorilla.
Direct Channel
From the Manufacturer to the customer directly
Restricted Distribution to one outlet/area
Exclusive
Ex. In and Out
Creating Assortment
purchase different products from different producers, then assemble into assortment
Horizontal Conflict
Between intermediaries over areas/customers sharing
Ex. Starbucks and Starbucks. Same company fighting over shared customers.
Channel coordination is achieved when a dominant channel member exercises its power
Administered VMS
Ex. Walmart is like "Bro. I wont put this on my shelves if you don't follow my rules"
Direct Marketing
A distribution channel consisting of direct communication with a consumer or business recipient
Ex. They make it, They sell it
Accumulating bulk
Buy units from small suppliers in small batches
Ex. Costco Buys batches of strawberries form multiple suppliers.
Agent Intermediaries
Acts as an intermediary, but does not take title to goods, can represent either a buyer or seller
Single owner operates each level of the channel
Corporate VMS
Ex. Disney
Wholesaler
Takes title to the goods it handles in bulk, and redistributes them to retailers, other distributors, and sometimes end consumers
Ex. Costco
Facilitate Transactions
Negotiate among channel members of how payment will be done. 30 days? 60? Cash? Penalties?