Chapter 11

Place and
Development
of Channel
Systems
 At the end of this presentation,
you should be able to:
1. understand what product classes suggest about Place objectives.
2. understand why some firms use direct channel systems while others
work with intermediaries and indirect systems.
3. understand how and why marketing specialists develop to make
channel systems more effective.
4. understand how to develop cooperative relationships and avoid
conflict in channel systems.
5. know how to channel members in vertical marketing systems shift
and share functions to meet customer needs.
6. understand the differences between intensive, selective, and
exclusive distribution.
7. know how multichannel distribution and reverse channels operate.
8. know the main approaches firms use to reach customers in
international markets.
9. understand important new terms
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 Marketing Strategy Planning

10-3
 Marketing Strategy Planning
Decisions for Place

CH 10: Place and CH 11: Distribution CH 12: Retailers,

Development of Customer Service & Wholesalers & Their
Channel Systems Logistics Strategy Planning

Place Direct vs. Channel Channel Other

objectives indirect specialists relationships decisions

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 Place Strategy

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 Place Decisions Are Guided by
“Ideal” Place Objectives

Product Place
Classes System
Suggest Place Key Is Not
Objectives Automatic
Issues

Place Decisions
Have Long-run Effects
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 Channel System May Be
Direct or Indirect
Greater Control

Lower Cost

Internet Makes Direct

Distribution Easier

Some Reasons Direct Contact with

For Choosing Customers
Direct Channels
No Suitable
Intermediaries
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 When Indirect Channels Are
Best

Convenience Store loyalty

Lower initial
investments

10-8
 Checking Your Knowledge
Andrea's Kitchen là một doanh nghiệp phục vụ
hoạt động thông qua trang web riêng của
mình. Khách hàng đặt đĩa tiệc, bánh ngọt và
các loại thực phẩm khác mà công ty sản xuất
để đặt hàng. Các mặt hàng sau đó được đóng
gói chân không trong đá khô và vận chuyển
đến địa chỉ của khách hàng thông qua giao
hàng qua đêm. Andrea's Kitchen là một phần
của:
A. indirect channel.
B. dual channel.
C. intermediary channel.
D. direct channel.
E. traditional channel.
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 Channel Specialists Adjust Discrepancies
with Regrouping Activities

Accumulating Bulk-Breaking
“collecting products from “dividing larger quantities
many small producers’ into smaller quantities’

Assorting Sorting
“putting together a variety “separating products into
of products’ grades and qualities’

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 Channel Relationship Must Be
Managed
Choosing the Type of
Relationship

Whole-Channel Product-
Key Market Commitment
Issues In
Channel Conflict Handling
Management

Role of Channel Captain

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 How Channel Functions May Be Shifted and
Shared in Different Channel Systems

A. How strategy decisions are handled B. How strategy decisions are handled
in a producer-led channel in a retailer-led channel
Producer’s Intermediary’s Producer’s
part of Retailer’s
part of part of part of
the job the job the job the job

Product
Place Place
Product

Customers Customers

Price Price
Promotion
Promotion

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 VERTICAL MARKETING SYSTEMS
FOCUS ON FINAL CUSTOMERS

Vertical marketing Corporate

systems are Administered

channel systems in
which the whole
channel focuses on Contractual

the same target

market at the end
of the channel

Three types of vertical

marketing systems
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 VERTICAL MARKETING SYSTEMS
FOCUS ON FINAL CUSTOMERS

Corporate
channel systems
Administered and
shorten channels
contractual systems
may work well

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 Characteristics of Traditional and
Vertical Marketing Systems

Type of channel

Characteristics Vertical marketing systems

Traditional
Administered Contractual Corporate

Amount of Little or Some to Fairly good

Complete
cooperation none good to good

Economic One
Control maintained None power and Contracts company
by leadership ownership

Typical
General Florsheim
Examples “inde- McDonald’s
Electric shoes
pendents”

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 Checking Your Knowledge
Dave Tindall điều hành "Maid to Perfection", một dịch
vụ dọn dẹp nhà ở và kinh doanh. Ông đã trả một
khoản phí để trở thành một phần của hệ thống "Maid
to Perfection" của các nhà khai thác địa phương. Thỏa
thuận bằng văn bản cho phép anh ta sử dụng tên
công ty và hướng dẫn vận hành, và thỏa thuận hứa
hẹn với Dave rằng sẽ không có một nhà điều hành
"Maid to Perfection" nào khác trong khu vực trực tiếp
của anh ta. Ông hoạt động như một doanh nhân bán
độc lập, nhưng vẫn là một phần của một tổ chức quốc
gia. Dave là một phần của:
A. traditional channel.
B. contractual channel.
C. corporate channel.
D. administered channel.
E. dual channel.
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 The Best Channel System Should
Achieve Ideal Market Exposure

Intensive Market
Exposure
Strategies
Selective

= number of
Exclusive outlets
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 Market Exposure Strategies

Intensive distribution is selling a product through all

responsible and suitable wholesalers or retailers who
will stock or sell the product

Selective distribution is selling through only those

intermediaries who will give the product special
attention

Exclusive distribution is selling through only one

intermediary in a particular geographic area

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 Market Exposure Strategies

Intensive distribution—sell it where

they buy it

Selective distribution—sell it where

it sells best

Exclusive distribution is just an

extreme case of selective distribution

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 Checking Your Knowledge

Chocolate Dreams là nhà sản xuất kẹo "kiểu

cũ" đắt tiền, chất lượng cao, được làm bằng tay
được bán thông qua các cửa hàng bách hóa cao
cấp và một số hiệu sách và cửa hàng quà tặng
cao cấp. Tiếp xúc thị trường lý tưởng cho các
sản phẩm do Chocolate Dreams sản xuất là:

A. intensive.
B. comprehensive.
C. exclusive.
D. extensive.
E. selective.
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 Limiting Market Exposure
Producer

U.S. Supreme Court

Vertical
Arrangements Wholesaler
May Be Legal

Retailer 1 Retailer 2
Retailer 2 Retailer 3
Retailer 3

Horizontal Arrangements
Are Illegal
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 Channel Systems Can Be
Complex

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 Channel Systems Can Be
Complex
Internet book retailers
General (like Amazon)
book
wholesaler Independent book Final
(like Ingram) retailers (like Campus consumers
Publisher of bookstores) (different
computer segments
(specialty) may prefer
Computer Electronics superstore
books supplies & to buy from
chains (like Best Buy) different
accessories
specialty channels)
wholesaler
Bookstore chains (like
Barnes & Noble)

Direct sales from

publisher’s website Note: Channel members may target different market segments; however, in some cases
they may compete for the same customers. And the channels shown here may also
compete with channels for similar books by another publisher.

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 Channel Systems Can Be
Complex

Multichannel
Distribution Ethical decisions
systems may be may be required
needed
Key
Issues
Reverse channels:
Reverse channels
sustainable and
are important too
profitable

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 Basic Approaches for Entering
International Markets

Management Joint Direct

Exporting Licensing
Contracting Venture Investment

Generally increasing investment, risk, and control of marketing

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 Key Terms

1. place 10. assorting

2. channel of distribution 11. traditional channel
3. direct marketing systems
4. discrepancy of 12. channel captain
quantity 13. vertical marketing
5. discrepancy of systems
assortment 14. corporate channel
6. regrouping activities systems
7. accumulating 15. vertical integration
8. bulk-breaking 16. administered channel
9. sorting systems
17. contractual channel
systems
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Key Terms

18. ideal market 26. management

exposure contracting
19. intensive distribution 27. joint venture
20. selective distribution 28. direct investment
21. exclusive distribution
22. multichannel
distribution
23. reverse channels
24. exporting
25. licensing
 THANK FOR LISTENING

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