Marketing_L8_2013-2014
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Ver>cal Marke>ng Systems
Conven&onal distribu&on channel
A channel consis&ng of one or more independent producers, wholesalers, and retailers, each a separate business seeking to maximize its own profits, even at the expense of profits for the system as a whole.
• Ver&cal Marke&ng Systems
A distribu&on channel structure in which producers, wholesalers, and retailers act as a unified system. One channel member owns the others, has contracts with them, or has so much power that they all cooperate.
Corporate VMS
A ver&cal marke&ng system that combines successive stages of produc&on and distribu&on under single ownership— channel leadership is established through common ownership.
Administered VMS
A ver&cal marke&ng system that coordinates successive stages of produc&on and distribu&on through the size and power of one of the par&es.
Contractual VMS
A ver&cal marke&ng system in which independent firms at di erent levels of produc&on and distribu&on join together through contracts.
Franchise organiza&on
A contractual ver&cal marke&ng system in which a channel member, called a franchisor, links several stages in the produc&on-distribu&on process.
Horizontal Marke>ng Systems
A channel arrangement in which two or more companies at one level join together to follow a new marke&ng opportunity.
Horizontal marke>ng channels: McDonald’s places “express” versions of its restaurants in Walmart stores. McDonald’s benefits from Walmart’s heavy store tra c, and Walmart keeps hungry shoppers from needing to go elsewhere to eat.
Mul>channel Distribu>on Systems
A distribu&on system in which a single firm sets up two or more marke&ng channels to reach one or more customer segments.
John Deere sells its familiar green and yellow lawn and garden equipment to consumers and commercial users through several channels, including Lowe’s home improvement stores and online. It sells its agricultural equipment through the premium John Deere dealer network.
Mul>channel Distribu>on System
Changing Channel Organiza>on
Changes in technology and the explosive growth of direct and online marke>ng are having a profound impact on the nature and design of marke>ng channels.
Disintermedia&on
The cu_ng out of marke&ng channel intermediaries by product or service producers or the displacement of tradi&onal resellers by radical new types of intermediaries.
Channel Design Decisions
• Marke>ng channel design
Designing e ec&ve marke&ng channels by analyzing customer needs, se_ng channel objec&ves, iden&fying major channel alterna&ves, and evalua&ng those alterna&ves.
Marke>ng channels are customervalue delivery networks
Analyzing Consumer Needs
Mee&ng customers’ channel service needs: Your local hardware store probably provides more personalized service, a more convenient loca&on, and less shopping hassle than a huge Home Depot or Lowe’s store. But it may also charge higher prices.
The company must balance consumer needs not only against the feasibility and costs of mee>ng these needs but also against customer price preferences.
The success of discount retailing shows that consumers will o[en accept lower service levels in exchange for lower prices.
Se\ng Channel Objec>ves
Companies should state their marke&ng channel objec&ves in terms of targeted levels of customer service.
The company’s channel objec&ves are also influenced by:
• the nature of the company
• its products
• its marke&ng intermediaries
• its compe&tors
• the environment