CHAPTER 14:
Marketing Channels and
Supply Chain Management
TYPES OF DISTRIBUTION
CHANNELS
A. Direct Selling
- direct sales between buyer & seller
Ex. Mary Kay, Tupperware, Baskets
B. Marketing Intermediaries: Figure 14.1
DUAL DISTRIBUTION
 Use of 2 or more distribution channels to
reach the same target market.
REVERSE CHANNELS
 Backward movement of goods from user to
the producer
Ex. recycling
Functions of Intermediaries
Create:
TIME UTILITY
PLACE UTILITY
OWNERSHIP UTILITY
Types of Wholesaling
Intermediaries
1. Manufacturer-Owned Facilities
- sales branches & offices
2. Independent Wholesaling Intermediaries
- account for majority of wholesaling establishments & wholesale
sales in U.S.
Merchant wholesalers: take title to goods they handle
Agents & Brokers: may or may not take possession of
goods but they never take title
3. Retailer-Owned Facilities
- independent retailers may band together to form
buying groups to get cost savings thru quantity
purchases
Factors Affecting Channel
Strategy Decisions
1. MARKET FACTORS
• whether product is intended for the consumer (long)
or the business (short) market
2. PRODUCT FACTORS
• perishable or complex products(short channels)
• generally the more standardized the product, the
longer the channel
3. PRODUCER FACTORS
• companies w/ adequate financial, managerial &
marketing resources are less compelled to utilize
intermediaries in marketing their products
4. COMPETITIVE FACTORS
• inadequate promotion of products may require
manufacturers to develop unique distribution
channels
Distribution Intensity
1. INTENSIVE DISTRIBUTION
- used for convenience goods
Ex. Gum, soda, candy, cigarettes
2. SELECTIVE DISTRIBUTION
- a firm chooses only a limited number of retailers in a
market area to handle its product line
Ex. Nike
3. EXCLUSIVE DISTRIBUTION
- extreme form of selective distribution
- most often used for specialty goods
 Suboptimization
Modes of Transportation
 Truck
 Internet
 Railroad
 Pipeline
 Air
 Water Carriers