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Chapter 11 – Marketing Channels: Retailing and Wholesaling

Marketing Channels and the Supply Chain

The nature and importance of marketing channels:
* Marketing channel or distribution channel – a set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user How channel members add value:

* Producers use intermediaries b/c they create greater efficiency in making goods available to target markets thru contacts, experience, specialization. * Having a distributor deduces the number of contacts the manufacturer needs * Functions preformed by marketing channels:

* Information Promotion
* Contact Matching
* NegotiationPsychical distribution
* Financing Risk taking
Channel Levels
* Channel levels: a layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer * The number of intermediary levels indicates the length of channel * Direct marketing channel: a marketing channel that has no intermediary levels * Indirect marketing channels: a marketing channel that includes one or more intermediaries

Channel behavior and organizations
* Channel conflict: disagreements among marketing channel members on goals, roles, and rewards – who should do what and for what rewards * Conventional distribution channel: consists of one or more independent producers, wholesalers and retailers. Each is a sep. business looking to maximize its own profit at the expense of the system as a whole. * Vertical marketing system (VMS): consists of producers, wholesalers, and retailers acting as a unified system. One channel member owns the other, has contracts with them and wields so much power that they must all co-operate. The w, r, or producer can dominate it. Three types of VMS’s are corporate, contractual, and administered. * Corporate VMS: a vertical marketing...
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