Channel Basics
A set of interdependent organizations that help make a product/service available for use or consumption
What is a marketing channel (aka distribution channel)?
Analyzing consumer needs
What is the first step in designing a channel?
Disagreements among channel members over goals, roles, or rewards
What is channel conflict?
Planning, implementing, and controlling the physical flow of goods, services, and information
What is logistics?
This retailer works closely with suppliers to keep prices low
What is Walmart?
They reduce the number of contacts, provide assortment, break bulk, or add services
What are ways channels create value for customers?
A layer of intermediaries that performs some work in bringing the product and ownership closer to the buyer
What is 'channel level?'
Two retailers of the same brand undercut each other’s prices or compete for the same customer base, causing tension between them
What happens when two retailers selling the same brand compete and create conflict?
Transportation, warehousing, inventory management, order processing
iPhones are sold through Apple Stores, online, and other retailers
What is a multichannel distribution system?
A channel with one or more intermediaries
What is an indirect channel?
A product in as many outlets as possible or a limited number of outlets in a location
What is intensive and selective distribution?
McDonald’s and its franchisees disagreeing over pricing
What is an example of vertical channel conflict?
To integrate suppliers, manufacturers, warehouses, stores, and customers efficiently
What is the goal of supply chain management?
Amazon bypassed physical bookstores to sell directly online
What is disintermediation?
When a firm uses two or more channels to reach customers
What is a multichannel distribution system?
To control brand image and build strong retailer relationships
Why would a company use exclusive distribution?
A channel structure in which producers, wholesalers, and retailers act as a unified system
What is a vertical marketing system (VMS)?
Moving materials into a business and moving products to customers
What are inbound and outbound logistics?
Nike opens its own stores instead of relying on Foot Locker
What is a corporate vertical marketing system (VMS)?
Cutting out intermediaries
What is disintermediation?
Horizontal (between firms at same level) and vertical (between levels in same channel)
What conflicts can arise between channel members?
Corporate: single ownership; Contractual: bound by contracts (franchises); Administered: leadership through power of one channel member.
What are three types of vertical marketing systems (VMS)?
Stocking little inventory and getting supplies only when needed
What is just-in-time (JIT) inventory?
Tesla sells directly to consumers, skipping traditional dealerships.
What is a direct distribution channel?