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• Channel intermediaries


  Marketing channel (also called a channel of distribution) is a business structure of interdependent organizations that are involved in the process of making a product or service available for use or consumption by end customers or business users

  
• Channel intermediaries


  • Facilitate the physical movement of goods from location to location, thus representing "place" or "distribution" in the marketing mix and encompassing the processes involved in getting the right product to the right place at the right time
• Channel members/intermediaries


  • Wholesalers
  • Distributors
  • Retailers
  • Agents
  • Brokers

  
• Role of channel intermediaries

  1. Negotiate with one another

  2. Buy and sell products

  3. Facilitate the change of ownership between buyer and seller in the course of moving the product from the manufacturer into the hands of the final consumer
• Channel functions performed by intermediaries

  • Provide assortment
  • Break bulk
  • Transport
  • Store
  • Provide market information
  • Provide financing
  • Risk taking
  • Facilitate negotiation

  
• Consumer channel structure


  A product can take many routes to reach its final consumer. Marketers search for the most efficient channel from the many alternatives available
• Marketing a consumer convenience good like gum or candy differs from marketing a specialty good like a Mercedes-Benz. The two products require very different distribution channels
• Level of channel distribution intensity

  The number of intermediaries used to distribute a product

  
• Retailing


  All activities directly related to the sale of goods and services to the ultimate consumer for personal, nonbusiness use
• Major types of retail operations

  • Department stores
  • Specialty stores
  • Supermarkets
  • Convenience stores
  • Discount stores
  • Warehouse clubs
• Non-store retailers


  • Direct selling
  • Direct marketing
  • Automatic vending
  • Electronic retailing
• Franchising


  A continuing relationship in which a franchisor grants to a franchisee the business rights to operate or to sell a product
• Franchisor


  The originator of a trade name, product, methods of operation, and so on, that grants operating rights to another party to sell its product
• Franchisee


  An individual or business that is granted the right to sell another party's product
• Franchise agreement


  1. Usually lasts for 10 to 20 years

  2. Can be renewed if both parties are agreeable
• Granting franchise rights


  1. Franchisee pays an initial, one-time franchise fee

  2. Franchisee pays royalty fees (usually 3-7% of gross revenues)

  3. Franchisee may pay advertising fees
• Basic forms of franchises

  • Product distribution franchise
  • Business format franchise
  • Conversion franchise