What is a Marketing Channel?

A set of interdependent organizations

that ease the transfer of ownership as
products move from producer to
business user or consumer.
 JOB OF INTERMEMDIARIES

Specialization and
Division of Labor

Three
Main Overcoming
Functions Discrepancies

Providing Contact
Efficiency
SPECIALIZATION AND DIVISION OF
LABOR

 Provides efficiency and cost savings

 Attains economies of scale
 Aids producers who lack resources to
market directly
 Builds good relationships with customers
 OVERCOMING DISCREPANCIES

Discrepancy The difference between the

amount of product produced
of and the amount an end user
Quantity wants to buy.

Discrepancy The lack of all the items a

customer needs to receive full
of satisfaction from a product or
Assortment products.
 OVERCOMING DISCREPANCIES

A situation that occurs when a

Temporal
product is produced but a
Discrepancy customer is not ready to buy it.

The difference between the

Spatial location of a producer and the
Discrepancy location of widely
scattered markets.
Contact Efficiency
Marketing Channels for Consumer Goods and Services
Marketing Channels for Industrial Goods and Services
Example of a Hybrid Marketing Channel
Choice of Channels: Market
Type Number of
of potential
Market customers

Order
Geographic
size
concentration
Choice of Channels: Product

Perishability

Unit
Value

Technical
Nature
Choice of Channels: Middleman
Services provided by
middlemen

Availability of desired
middlemen

Producer’s and
middlemen’s policies
Choice of Channels: Company
Desire
for channel control

Services provided
by seller

Ability
of management

Financial resources
LEVELS OF DISTRIBUTION INTENSITY

Number of
Intensity Level Objective
Intermediaries

Achieve mass market

Intensive selling. Many
Convenience goods.

Work with selected

intermediaries.
Selective Several
Shopping and some
specialty goods.
Work with single
intermediary. Specialty
Exclusive One
goods and industrial
equipment.
Conventional Versus Vertical
Marketing System
Vertical Marketing Systems
Horizontal Marketing Systems
 Horizontal marketing systems is a channel
arrangement in which two or more companies at
one level join together to follow a new marketing
opportunity.
 The major benefit is that companies combine their
capital, production capabilities, marketing
resources and therefore accomplish more.
 Companies might join forces with competitors or
noncompetitors. They might work with each other
on a temporary or permanent basis or they may
create a separate company.
 E.g. Coca-Cola and Nestle formed a joint
venture to market ready-to-drink coffee and tea
worldwide. Coke provided worldwide
experience in marketing and distribution
beverages and Nestle contributed two
established brand names - Nescafe and Nestea.
Hybrid Marketing Systems
 Hybrid marketing systems is also called
multichannel distribution systems where the
company uses several marketing channels (e.g.
direct mail - telemarketing, retailers,
distributors, dealers, own sales force) to sell its
products to different customer segments.
 E.g. IBM uses its own sales force + IBM direct
which is the catalog and telemarketing
operation of IBM + independent IBM dealers +
IBM dealers for business segments + large
retailers like Wal-Mart.
Disintermediation
Occurs when producers sidestep
intermediaries and sell directly to final
buyers, or when radically new types of
channel intermediaries displace
traditional ones.

The Internet has made the disintermediation of

many traditional retailers possible.
Disintermediation Example
Calyx & Corolla sells
fresh flowers and
plants direct to
consumers over the
phone and via the
Web, drastically
reducing the time it
takes flowers to
reach consumers via
conventional retail
channels.
(Non-) Disintermediation Example

Black & Decker chose to avoid disintermediation by not using the

Internet to sell their products. Instead B&D directs consumers to
stores that carry its products.
Channel Cooperation & Conflict
• Channels are most effective when:
– Each member performs the tasks it does best.
– Channel members cooperate to attain overall channel goals.
• Channel Conflict
– Horizontal Conflict: conflict among firms at the same level
of the channel (e.g., retailer to retailer).
• Example: Two retailers compete to carry a supplier’s “exclusive” product.

– Vertical Conflict: conflict between different levels of the

same channel (e.g., wholesaler to retailer).
• Example: Manufacturer competes with retailer in selling product to target market.

• Some conflict can be healthy competition.

Channel Conflict: Goodyear

Goodyear’s conflicts
with its independent
dealers have
decimated the firm’s
replacement tire sales.
Marketing Logistics
 Definition: The physical flow of goods, services, and
related information from points of origin to points of
consumption.
 Includes:
 Inbound distribution
 Outbound distribution
 Reverse distribution
Inventory Management
• Must strike a balance between
– too much and too little
inventory
– buffers and shortages
– carrying costs and
ordering/setup costs

• Just-in-time inventory systems

RFID technology promises to
automate the entire distribution
• RFID or Smart Tag technology chain, resulting in significant cost
savings.
RFID – The Wave of the Future?
Key benefits
 fewer stock-outs
 reduced logistics labor costs
 more accurate inventory
information
 more efficient flow of goods
 happier customers

Retailers may soon mandate

supplier use of RFID.
Transportation
 Trucks
 Railroads
 Ships
 Pipelines
 Air
 Internet
 Intermodal
transportation
Intermodal Transportation

Intermodal transportation combines two or more modes of

transportation. Fishyback = water and trucks; Piggyback = trucks and
rail; Trainship = water and rail; Airship = air and water.
Third-Party Logistics
Most small and medium
size companies
outsource transportation
to UPS or other logistics
providers.
PROMOTION
  Plays a key role in obtaining
and keeping customers
 Enables businesses to
communicate effectively with
customers
Importance  Informs consumers about
goods/services and persuades
of the them to buy
Promotional
Mix
 Promotion’s Recipe
for Success:
Mix various
communication
activities together and
serve to potential
customers until desired
outcome is achieved.
 Diamonds from
Desmond’s Say No to Drugs.
Jewelers are a girl’s
best friend.

Services
Ideas
Images
Goods

At Techco, we’re
friendly to our
customers and
the environment.

The Vet for Your

Pet
THE COMMUNICATION PROCESS
THE PROMOTIONAL MIX
The importance of promotional elements varies during the
consumer’s purchase decision
A comparison of push and pull promotional strategies
 DEVELOPING THE
PROMOTION PROGRAM

 Who is the target audience?

 What are (1) the promotion
objectives, (2) the amounts of money
that can be budgeted for the
promotion program, and (3) the kinds
of promotion to use?
 Where should the promotion be run?

 When should the promotion be run?

 DEVELOPING THE
PROMOTION PROGRAM
42
 CONSUMER PROTECTION ACT, 1986
 Enacted to provide for the better protection of the
interest of consumer
 Act applies to whole of India except Jammu and
Kashmir
 The act was amended in 2002 and the amendments
came into force w.e.f. 15th March 2003.

43
WHO IS A CONSUMER ?

 Any person who buys goods or avails services for

consideration
 Consideration may be fully paid, partially paid or
fully promised to be paid or partially promised to
be paid
 Any body who uses the goods or services with the
consent of the consumer

44
WHO IS A CONSUMER ?

 Legal heir of consumer in case death of

consumer
 Does not include any person who buys goods
for resale or commercial purpose and services
for commercial purpose
 However any person who buys goods for
commercial use but exclusively for his
livelihood by means of self employment is a
consumer.

45
 Know your rights
1. Right to Safety: to be protected against the sale of goods
and services which are spurious/hazardous to life.
2. Right to Information: to know the quality, quantity, weight
and the price of goods/services being paid for, so that you
are not cheated by unfair trade practices.
3. Right to Choose: to be assured, wherever possible, access to
a variety of goods and services at a competitive price.
4. Right to be Heard: to be heard and assured that your
interest will receive due consideration at appropriate fora.
5. Right to seek Redressal: to seek redressal against unfair or
restrictive trade practices or exploitation.
6. Right to Consumer Education: to have access to consumer
education.

46
FORUM & JURISDICTION
 Consumer Disputes Redressal Forums (District Forum)
 Claims less than or equal Rs.20 lacs.

 Consumer Disputes Redressal Commissions (State

Commission)
Claim more than Rs.20 lacs & less than Rs.1 crore & appeals.

 National Consumer Disputes Redressal Commission

(National Commission)
Claim equal to Rs.1 crore & appeals
 FILING OF COMPLAINTS
The Fee for filing the Complaint for the district forum is as under
Sr. Value of Goods / Service and Compensation Amount
No. of Fees
1) Upto Rs. 1 lakh rupees Rs. 100
2) Rs. 1 Lakh and above but less than Rs.5 lakhs Rs. 200
3) Rs. 5 Lakhs and above but less than Rs. 10 lakhs Rs. 400

4) Rs. 10 lakhs and above but less than Rs. 20 Rs.1500

lakhs
The fees shall be paid by Cross demand Draft drawn on a nationalized bank or
through crossed Indian postal order drawn in favour of the Registrar of the Sate
Commission and payable at the place of the State Commission (w.e.f. 5.3.2004.)

48
REQUISTIES OF A COMPLAINT

 Who can file a complaint

 Where to file a complaint

 How to file a complaint

 What constitutes a complaint?

 Procedure for filing the appeal

ESSENTIAL INFORMATION IN THE
APPLICATION
 Name and full address of complainant

 Name and full address of opposite party

 Description of goods and services

 Quality and quantity

 Price

 Date & proof of purchase

 Nature of deception

 Type of redressal prayed for

BENEFITS & RELIEFS
 Benefit
 Disposal within 90 days

 No adjournment shall ordinarily be granted - Speedy trial

 Relief
 Removal of defects in goods or deficiency in services.

 Replacement of defective goods.

 Refund against defective goods or deficient services.

 Compensation.

 Prohibition on sale of hazardous goods.

Social Responsibility