Mktg 1

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Marketing distribution channels
Introduction:
The term channel is derived from Latin word canalis, which means canal. Formerly known as PLACE in the marketing mix
Marketing channels (channel of distribution, place)
* Can be viewed as a large canal or pipeline through which products, their ownership, communication, financing and payment, and accompanying risk flow to the consumer. * It is a set of interdependent organizations that eases the transfer of ownership as products move from producer to business user or consumer. * Marketing channel decisions are among the most important challenge faced by marketing managers. A company’s channel decisions directly affect every other marketing decision. * Companies often pay too little attention to their distribution channels. * Distribution channel decisions often involve long-term commitments to other firms. * Choosing the best route or way

Channel members
* Many different types of organizations that participate in MKTG channels * They are ‘intermediaries, resellers, middlemen’ that negotiate w/ one another, buy & sell products, and facilitate the change of ownership towards the final consumer. Why are marketing intermediaries used?

* The use of marketing intermediaries results from their greater efficiency in making goods available to target markets. Through their contacts, experiences, specialization, and scale of operation, intermediaries usually offer the firm more than it can achieve on its own. * From the Economics’ point of view, the role of marketing intermediaries is to transform the assortments of products made by producers into the assortments wanted by customers. Intermediaries play an important role in matching supply and demand. * Producers produce narrow assortments, but consumers want broad assortments. * Intermediaries buy large product quantities of many producers and then break them down into the smaller quantities preferred by consumers. * There is a joint effort of all channel members to create a continuous and seamless supply chain. * Facilitate distribution process by providing 1specialization and division of labor, 2overcoming discrepancies, 3providing contact efficiency

 
1Specialization and division of labor
Breaking down a complex task into smaller, simpler ones and allocating these tasks to specialists that will create greater efficiency and lower average production costs. Aiding producers who lack motivation, financing, or expertise to market directly to end users

2 Overcoming discrepancies
MKTG channels aid in overcoming discrepancies of 1quantity, 2assortment, 3temporal, and 4spatial 

Discrepancies include:

1quantity-the difference between the amount of product produced vs. amount that end users want to buy -by storing the product and distributing it in the appropriate amounts, mktg channels overcome quantity discrepancies by making products available in the quantities that consumers’ desire

2assortment-occurs when a customer doesn’t have all of the items needed to receive full satisfaction from a product -to overcome discrepancies of assortment, mktg channels assemble in one place many of the products necessary to complete a consumers’ needed assortment

3temporal-created when a product is produced but a consumer is not ready to buy it -mktg channels aid in concentrating goods for the peak season of such products

4spatial-because mass production requires many potential buyers, markets are usually scattered, it creates a spatial discrepancy, and as a result, markets are needed to absorb the outputs of mass producers -mktg channels help in spatial discrepancies through scattering products on different market locations

3Providing contact efficiency
Reduces the number of stores that customers must shop to complete purchases  
Distribution channel functions
* A distribution channel moves goods...
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