Importance Of Marketing Channels

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Register to read the introduction… The Nature and Importance of Marketing Channels
Marketing Channel (Distribution channel): A set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business
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Manufacturer-sponsored retailer franchise system
2. Manufacturer-sponsored wholesales franchise system
3. Service-firm-sponsored retailer franchise system

Consumers often cannot tell difference between contractual and corporate VMS indicate success organizations compete with corporate chains.

Administered VMS: A vertical marketing system that coordinates successive stages of production and distribution through the size and power of one of the parties * Command unusual cooperation from resellers regarding displays, shelf space, promotions and price policies

Horizontal Marketing Systems: A channel arrangement in which two or more companies at one level join together to follow a new marketing opporortunity * Combine financial, production or marketing resources * Join forces with competitors or non-competitors on a temporary or permanent basis, or create a separate
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* Constrained by economic conditions and legal constraints

Identifying Major Alternatives

Types of Intermediaries

* Though retailers and resellers can reach more and different kinds of buyers, but difficult to manage and control * Direct and indirect channels will compete

Number of Marketing Intermediaries

Intensive Distribution: Stocking the product in as many outlets as possible (available where and when)
Exclusive Distribution: Give a limited number of dealers the exclusive right to distribute the company’s products in their territories (Luxury brands)
Selective Distribution: The use of more than one but fewer than all of the intermediaries that are willing to carry the company’s products (good working relationships with selected channel members, expect a better-than-average selling effort, good market coverage with more control and less cost than intensive distribution)

Responsibilities of Channel Members

* Agree on terms and responsibilities * Agree on Price policies, conditions of sale, territory rights, specific services * Careful on where to place new resellers * Mutual service and duties spelled out carefully for franchise and exclusive distribution channel

Evaluating Major

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