Marketing Channels & Retail Management

• Distribution channel selection and retail management are key topics
• Distribution strategies and supply chain management are essential for channel selection and management

The Nature and Importance of Marketing Channels

• Marketing channel intermediaries make buying easier for consumers

Channel Levels

• Channel level is the layer of intermediaries performing work to bring product ownership closer to the final buyer
• Direct marketing channel has no intermediary levels
• Indirect marketing channel contains one or more intermediary levels

Channel Flows

• Channel members connect via the physical products
• Channel members connect via the flow of ownership
• Channel members connect via the payment flow
• Channel members connect via information flow
• Channel members connect via promotion flow

Marketing Channels for Consumer Products

• Direct channel: Producer to Consumers
• Retailer channel: Producer to Retailers to Consumers
• Wholesaler channel: Producer to Wholesalers to Retailers to Consumers
• Agent/broker channel: Producer to Agents or brokers to Wholesalers to Retailers to Consumers

Channels for Business and Industrial Products

• Direct channel: Producer to Industrial User
• Industrial distributor channel: Producer to Industrial distributor to Government buyer to Industrial user
• Agent/broker channel: Producer to Agents or brokers to Industrial user

Channel Intermediaries

• Merchant Wholesaler buys goods from manufacturers, takes title, stores, resells, and ships them
• Agents and Brokers are wholesaling intermediaries that facilitate the sale of a product by representing channel members

Retailers

• Retailers sell directly to customers
• Retailers simplify distribution with an assortment of goods in one location

Suppliers/Distributors Selection Criteria Considerations

• Market factors such as market size, types of consumers, and purchase patterns
• Producer factors like the number of product lines, financial resources, and brand image
• Product factors including product types and specific transportation or storage needs
• Other factors such as compliance with labor laws, acceptable working conditions, and legal issues

Channel Behavior and Organization

• Conventional distribution systems have independent entities maximizing their own profits
• Vertical marketing systems (VMSs) integrate producers, wholesalers, and retailers into a unified system

Types of Vertical Marketing Systems

• Corporate marketing systems

• Contractual marketing systems

• Administered marketing systems

• Horizontal marketing system involves two or more companies at one level joining together for a new marketing opportunity

Channel Functions Performed by Intermediaries

• Transactional Functions involves contacting/promotion, negotiating, and risk-taking
• Logistical Functions involves physically distributing, storing, and sorting
• Facilitating Functions include researching and financing

Outsourcing Logistics Functions

• Outsourcing Logistics Functions involves 3PLs and 4PLs
• Outsourcing Logistics Functions reduces inventories
• Outsourcing Logistics Functions moves stock to fewer centers
• Outsourcing Logistics Functions provides a better level of service

Key Business Processes of Excellent Supply Chain Management

• Customer relationship management
• Customer service management
• Demand management
• Order fulfillment
• Manufacturing flow management
• Supplier relationship management
• Product development and commercialization
• Returns management

Trends in Supply Chain Management

• Outsourcing Logistics Functions
• Public-Private Partnerships
• Electronic Distribution
• Emerging/New Distribution Structures
• Global Supply Chain Management
• Supply Chain Analytics and Technology
• Just-in-Time (JIT) Inventory Systems

Electronic Distribution

• It includes products/services distributed electronically via fiber-optic cable or satellite transmission
• Three-dimensional printing allows creating products from a digital file and liquefied raw materials at the printer's location

Emerging Distribution Structures

• Subscription services offering curated or personalized product selections
• Store pick-up services facilitating online purchases with in-store collection

Global Supply Chain Management

• Managing supply chain risk is critical
• Proactive security and reactive resiliency measures are must ensure supply chain continuity

Supply Chain Analytics and Technology

• Supply chain analytics enhance operations
• Advanced technology improves supply chain efficiency through big data

Just-in-Time (JIT) Inventory Systems

• It keeps inventory as low as possible

Advantages

• Lower storage costs, improved cash flow, lower loss risk

Disadvantages

• Increased risk of stockouts, little room for error, pricing inflexibility

Types of Wholesalers (Wholesaling Intermediaries)

• Merchant wholesalers
• Brokers and agents
• Manufacturers' and retailers' branches and offices

Wholesaling

• Wholesaling involves strategies like segmentation, service positioning, and a value-driven marketing mix
• Wholesalers must develop marketing strategies to create customer value like retailers

Retailing

• Retailing involves selling products/services directly to final consumers for personal use
• Shopper marketing and omni-channel retailing are involved
• Retailers sales mainly from retailing

Classification of Retail Operations

• Ownership
• Level of Service
• Product Assortment
• Price

Classification of Ownership

• Independent Retailers are owned by a single entity
• Chain Stores are part of a group
• Franchises operate under a license

Types of Retailers by Product Lines

• Specialty stores
• Department stores
• Supermarkets
• Convenience stores
• Superstores
• Category killers
• Service retailers

Types of Retailers By Relative Price Characteristics

• Discount stores
• Off-price retailers
• Independent retailers
• Factory outlets
• Warehouse clubs

Retailers' Marketing Decisions Major Variables

• Product assortment
• Services mix
• Store atmosphere
• Target market
• Promotion

The Retailing Mix Includes

• Product
• Personnel
• Presentation
• Price
• Place
• Promotion

Product Assortment

• Classification based on width and depth of product lines

Sensory Cues in Retail Environments

Visual

• Employee type and density
• Merchandise type and density
• Fixture type and density
• Odors / Olfactory cues
• Sound / Auditory cues
• Tactile cues
• Taste

Webrooming

• Webrooming involves researching online and buying in-store
• Showrooming involves researching products in a physical store before buying online

Retailing Trends and Developments

• Omni-Channel Retailing involves seamless shifting across channels

Future Retail Trends & the Role of Technology

• More physical stores for online retailers
• More transparent transactions via online reviews and ratings
• Technology acting as a new sales assistant

Technologies in Retail Stores

• People counters/trackers
• Queue management

The Future of Brick & Mortar Stores

• Brick & mortar stores: selling brands experiences
• Offer unique benefits for customers
• Lululemon, Nike, Urban Outfitters are examples