MARKETING CHANNEL

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MARKETING CHANNEL by Mind Map: MARKETING CHANNEL

1. DEFINITION

1.1. System of marketing institutions that enhances the physical flow of goods and services, along with ownership title, from producer to consumer or business user

2. ROLES

2.1. Facilitating the exchange process by reducing the number of marketplace contacts necessary to make a sale

2.2. Adjusting for discrepancies in the market’s assortment of goods and services via sorting

2.3. Standardizing exchange transactions by setting expectations for products

2.4. Facilitating searches by both buyers and sellers

3. TYPES OF MARKETING CHANNEL

3.1. Resellers

3.1.1. Wholesaler – firms that acquire large quantities of products from manufacturers/producers and then sort,store and resell them to retailers, businesses or sometimes end consumers. Takes title to the goods it handles

3.1.2. Retailers – all channel members who are involved in selling products or services to consumers. Takes title to the goods it handles

3.2. Brokers

3.2.1. Agents – people who facilitate the exchange of products but do not take title(i.e purchase) anything that they sell.

3.3. Facilitators

3.3.1. Transportation companies –organizations that assists in the distribution of products but do not take title or negotiate sales.

3.4. Service firms market through short channels because they sell intangible products and need to maintain personal relationships within their channels

3.4.1. Haircuts, manicures, and dental cleanings all operate through short channels

4. Channel Management and Leadership

4.1. Channel Conflict

4.1.1. Horizontal conflict Disagreements among channel members at the same level, such as two competing discount stores

4.1.2. Vertical conflict Occurs among members at different levels of the channel

4.1.3. The gray market Goods produced for overseas markets that re-enter the U.S. market and compete against domestic versions

4.2. Achieving Channel Cooperation

4.2.1. Best achieved when all members of channel see themselves as equal components of the same organization

5. Vertical Marketing Systems

5.1. Planned channel system designed to improve distribution efficiency and cost-effectiveness by integrating various functions throughout the distribution chain

5.2. Benefits

5.2.1. Improves chances for controlling and coordinating the steps in the distribution or production process leading to greater efficiency of channels

5.2.2. May lead to the development of economies of scale that ultimately saves money

5.2.3. May let a manufacturer expand into profitable new businesses

5.2.4. Sharing of information and resources among channel members

5.2.5. Greater collective bargaining power

5.3. Disadvantages

5.3.1. Involves some costs

5.3.2. Marketers lose some flexibility

5.4. Corporate and Administered Systems

5.4.1. Corporate marketing system - A single owner operates the entire marketing channel

5.4.2. Administered marketing system - A dominant channel member exercises power to achieve channel coordination

5.5. Contractual Systems

5.5.1. Coordinates channel activities through formal agreements among channel members

6. Physical Distribution

6.1. Customer service

6.2. Transportation

6.3. Inventory control

6.4. Protective packaging and materials handling

6.5. Order processing

6.6. Warehousing

7. Direct Selling

7.1. Direct channel - Carries goods directly from a producer to the business purchaser or ultimate user

7.2. Direct selling - Strategy designed to establish direct sales contact between producer and final user

8. Channels Using Marketing Intermediaries

8.1. Producer to wholesaler to retailer to consumer

8.2. Producer to wholesaler to business user

8.3. Producer to agent to wholesaler to retailer to consumer

8.4. Producer to agent to wholesaler to business user

8.5. Producer to agent to business user

9. Dual Distribution

9.1. Movement of products through more than one channel to reach the firm’s target market

9.2. Used to maximize the firm’s coverage in the marketplace or to increase the cost-effectiveness of the firm’s marketing effort

10. Reverse Channels

10.1. Channels designed to return goods to their producers

10.2. Growing importance

10.2.1. Rising prices for raw materials

10.2.2. Increasing availability of recycling facilities

10.2.3. Passage of additional antipollution conservation laws

11. Logistics and Supply Chain Management

11.1. Effective logistics requires

11.1.1. Proper supply chain management

11.1.2. Control of the activities of purchasing, processing, and delivery

11.2. Supply chain - Complete sequence of suppliers and activities that contribute to the creation and delivery of merchandise

12. Radio Frequency Identification (RFID)

12.1. Technology that uses a tiny chip with identification information that can be read by a scanner using radio waves from a distance

12.2. Can be used to grant access to restricted areas or to speed delivery processing

13. Enterprise Resource Planning

13.1. Software system that consolidates data from among a firm’s various business units

14. Logistical Cost Control

14.1. The distribution function accounts for half of a firm’s total marketing costs

15. The Problem of Suboptimization

15.1. Results when the managers of individual physical distribution functions attempt to minimize costs, but the impact of one task on the others leads to less than optimal results