Marketing ：Class (Session ) Placement (Distribution) - Marketing Channels.docVIP

Marketing 360：Class 10 (Session 2) Placement (Distribution) - Marketing Channels Marketing 360: Class 10 (Session 2) Professor Kurt Carlson * * * Placement (Distribution) Marketing Channels Kurt Carlson Mkt 360 Term 2, 2001 Three C’s Customer Company Competition Four P’s Product Promotion Pricing Placement Agenda The function of channels Channel design Depth Breadth Relationships with channel members What are Marketing Channels? The are sets of interdependent organizations (i4>>.e>., intermediaries) involved in the process of making a product or service available for use or consumption>. The channel performs the work of moving goods from producers to consumers to overcome the time, place, and possession gaps that separate producers from customers>. Marketing Channels Channels exist when they are more efficient than direct distribution (note the internet is a channel) # of contacts = M*C = D*M + D*C = D(M + C) D(M + C) < M*C if and only if (D < M) and (D < C) M M M C C C Pure direct distribution (zero level channel) Number of Contacts = 9 C C C Pure intermediation (one-level channel illustrated) Number of Contacts = 6 D M M M Generic Channel Functions Product Information Promotion & Demand Generation Product Customization Quality Assurance Lot Size Assortment Availability After Sales Service Logistics Financing Waiting Time Spatial Convenience (Especially Internet) Channel Design: Depth Issue isn’t whether these functions will be done>. It is who will do them! To the extent that the manufacturer does them Its costs go up ?? its prices will be higher When some of them are shifted to intermediaries Manufacturer’s costs are lower, but intermediaries will add their charges If intermediaries are more efficient than manufacturer, prices should be lower than under direct distribution All else equal, consumers will purchase from the system giving the lowest price, which explains why efficiency is necessary for channels