Marketing - Chapter 10

Channel Behaviour and Organization: LO2: Discuss how channel members interact and how they organize to perform the work of the channel. Channel Behaviour: - Channel Conflict: - Disagreements among marketing channel members on goals, roles, and rewards - who should do what and for what reward. - Horizontal Conflict : occurs among firms at the same level of the channel. Holiday Inn franchisees might complain about other Holiday Inn operators overcharging guests or giving poor service, hurting the overall Holiday Inn image. - Vertical Conflict : conflict between different levels of the same channel, is even more common. For example, McDonald’s has recently faced growing conflict with its corps of 3100 independent franchisees: - Some conflict in the channel takes the form of healthhy competition. Without it, the channel could become passive and noninnovative. Vertical Marketing Systems: - Conventional Distribution Channel: - A channel consisting of one or more independent producers, wholesalers, and retailers, each a separate business seeking to maximize its own profits, perhaps even at the expense of profits for the system as a whole. - Vertical Marketing System (VMS): - A channel structure in which producers, wholesalers, and retailers act as a unified system. One channel member owns the others, has contracts with them, or has so much power that they all cooperate.

Setting Channel Objectives: - Identifying Major Alternatives: - Next it should identify its major channel alternatives in terms of the 1. types of intermediaries, 2. the number of intermediaries, and 3. the responsibilities of each channel member. Types of Intermediaries: - Number of Marketing Intermediaries: - Intensive Distribution: - Stocking the product in as many outlets as possible. - Example: toothpaste, candy, coca cola are sold in millions of outlets to provide maximum brand exposure and consumer convenience. - Exclusive Distribution: - Giving a limited number of dealers the exclusive right to distribute the company’s products in their territories. - Example: Exclusive distribution of 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. - Example: electronics, furniture, and home appliances Responsibilities of Channel Members: - Evaluating the Major Alternatives: - Each alternative shold be evaluated against 1. Economic: - a company compares the likely sales, costs, and profitability of different channel alternatives. What will be the investment required by each channel alternative, and what returns will result? 2. Control: - Using intermediaries usually means giving them some control over the marketing of the product, and some intermediaries take more control than others. 3. Adaptability Criteria: - Channels often involve long-term commitments, yet the company wants to keep the channel flexible so that it can adapt to environmental changes. Designing International Distribution Channels: -

Quiz #10 1. When Toyota announces a product recall on its Camry model due to a faulty igniter, they are using ________ to coordinate with dealers and car owners. - Reverse logistics 2. A(n) ________ is considered a marketing intermediary - Wholesaler 3. .Which of the following is true of a vertical marketing system? - It has one channel member owning all the other channel members or has contracts with all other channel members. 4. Which of the following is an example of a horizontal conflict in a distribution channel? - A Ford car dealer complaining that another Ford dealer is underpricing the same models. 5. A ________ is made up of a company, its suppliers, distributors, and, ultimately, customers who "partner" with each other to improve the performance of the entire system. - Value delivery network 6. Olsen Canada is a retailer of international women's clothing and accessories. Olsen sells its products through its online website, boutique stores, factory outlets, and in dedicated areas at many Hudson Bay locations. Which kind of channel arrangement does Olsen employ to distribute its products? - Multichannel distribution system 7. Many athletic stadiums enter into contractual agreements with national beverage companies and food franchises to distribute only their brand-name products at the respective venues. This is an example of ________. - Exclusive dealing 8. Which of the following is most efficient for short hauls of high-value merchandise and is highly flexible in its routing and time schedules? - Trucks 9. ________ involves combining two or more systems of transportation to move products. - Multimodal transportation 10. High-end luxury brands like Bentley for cars, Louis Vuitton for handbags, and Rolex for watches use ________ distribution, giving a limited number of dealers the sole right to sell products in a specified geographic territory. - Exclusive 11. Rage, a leading motor vehicle manufacturer, introduces a new superbike model. It invites proposals from independent dealers who are willing to set up exclusive showrooms that only sell Rage's superbikes. Chosen dealers will sell and service the superbikes, and Rage will oversee national advertising. This is most likely an example of a(n) ________. - Manufacturer-sponsored retailer franchise system 12. A firm that uses direct marketing would sell its products through ________. - The company website 13. Which of the following is a difference between storage warehouses and distribution centres? - Storage warehouses store goods for moderate to long periods, while distribution centres are used to move goods rather than just store them.