This document provides an overview of marketing channel structure and functions. It discusses how channel members add value through specialization and the division of labor principle. The document also examines different types of marketing channels for consumers and businesses. It explores considerations for selecting and managing multi-channel distribution systems, as well as carefully selecting and developing international channel members. Finally, it summarizes that future distribution channels will be more interactive and challenged by the internet, while international channels will remain important with an adaptive focus on customer preferences.

1. Marketing Channel Structure
and Functions
Overview

2. Outline
• Overview
• Primary Function of Channel Members
• How Channel Member add Value
• Consumer Channels Vs Business Channels
• Multi Channel Distribution
• Distribution System Selection
• Carefully Select Channel Members
• Building International Distribution
• Future Direction of Distribution
• Summary

3. Overview
• Business channel management - is the
process of designing a set of marketing
and distribution arrangements that fulfill
the requirements and preferences of
targeted market segments and
customers, creating value through direct
sales force and logistics systems, and
constructing offerings for channel
members that build marketplace equity.

4. What is a Marketing Channel?
A marketing channel is a a set of interdependent
organisations involved in the process of making a
product or service available for use or
consumption.

5. Primary Functions of Channel Members
• to be a stockist of your product
• to represent your brand in the market place
• to gather marketing intelligence
• to assume risk
• to deliver product and offer post sales support
• to add value to the sale

6. How Channel Members Add Value

7. Primary Questions
1. Which intermediary, or
intermediary combination, is best
suited for to take a new product
or service to market?
2. How should the intermediary
network be managed once it is up
and running?

8. Specialisation and Division of Labour Principle-
Fender Guitars
Production Distribution
Tasks Tasks
Thickening the wood Buying
Shaping body and neck Selling
Gluing and clamping parts Transferring the title
Sanding and assembly Transportation
Applying finish Storage
Installing electric components Processing orders
Attaching machine heads & strings Providing information
Adjusting action and pickup After sales customer service

9. Specialisation and Division of Labour
Principle- Fender Guitars
Production Distribution
Worker Manufacturer
Production Distribution
tasks allocated tasks allocated
Worker to workers Agents to intermediaries
specializing specializing
in performing in performing
Wholesalers
Worker those those
tasks tasks
Retailers
Worker
Consumers
Result? Production Efficiency Result? Distribution Efficiency

10. Consumer Marketing Channels

11. Business Marketing Channels

12. Multi Channel Distribution System

13. Distribution System Selection
• Marketing Managers select the most feasible
marketing channels that effectively perform the
business processes and functions needed to
correct the targeted gaps in service outputs.
• Hybrid Channels, Multiple Channels and
Shorter Channels or Direct Channels.

14. Figure 1 : Channel Selection: Traditional View
Manufacturer
Wholesaler Own sales force or reps Wholesaler
Dealer
Customer

15. Figure 2 : Hybrid Channel
Customer
Demand Physical After -sales
generation distribution service
Own sales Outside Inside or Outside
force distributor service specialists
Supplier

16. Figure 3 : The Free – Riding Problem
Supplier A Supplier B
Distributor
Demand generation
Demand fulfillment Full function
functions
functions distributor
Customer

17. Figure 4 : Multiple Channels
Seller
No frills/Low cost channel Full service/Full cost channel
Customers who wear
Price Service
sensitive different hats on different sensitive
customers purchase occasions customers

18. Figure 5 : Multiple Channel Conflict
Seller
Α B
Full product line Limited product line
X and Z X
Mainly Z Customers Mainly X Customers

19. Figure 6 : The role of master distributors
Seller
Master distributor
Retail distributors
Bunnings Hardware
House
Dealer
Building Trade and
Do-it yourself (DIY) customers

20. Carefully Select Channel Members
• Specify channel capabilities the supplier seeks
in terms of:
Technical competence
Sales force deployment
Warehouse and delivery capabilities
Financial stability
Leadership

21. Build International Marketing Channels
• Firms operating overseas should anticipate
longer business processes and additional
functions in the marketing channels.
• They must cover additional geography
• Adhere to export and import regulations of each
country market as well as local culture and
distribution practices

22. Future Direction of Distribution …..
• Proliferation of information
technology.
• Polarisaton of customers
(consolidation on one hand and
fragmentation on the other).
• Manufacturing operations that can
mass customise.
• Quick shipment distribution logistics.

23. Summary
• Regardless of structural form, distribution
channels in the future will be more
interactive with the customer.
• The internet will continue to challenge
traditional channels.
• International channels of distribution are
important
• Channel Management is about being
adaptive to where the customer prefers to
buy.

24. You are welcome to contact Nigel Bairstow at B2B
Whiteboard your source of B2B Asia / Pacific
marketing advice
http://www.linkedin.com/pub/nigel-bairstow/6/41b/726
http://twitter.com/#!/b2bwhiteboard