MARKETING UNIT TEST 3 NOTES
THE PLACE
1. Nature and importance of marketing channels
Role of intermediaries
The distribution system involves INTERMEDIARIES (middlemen) that facilitate the transportation from producer to consumer.
2. Value created by intermediaries
Perspective of the producer
Transactional Function ( buying, risk taking +selling)
Logistical Function (gathering, storing, dispersing)
Facilitative Function (making the product more attractive/ fit the branding appeal of the product)
Perspective of the consumer
Time  to have the product WHEN they want it
Place  to have the product WHERE they need it
Form  to appeal to the consumers’ ego/ branding identity
Possession  to have WHAT you want in relation to time
3. Channel structure and organization
(1) Producer  Consumer
Direct System – reflective of most services and small operations
Example: carpentry, farmers market
(2) Producer  Retailer  Consumer
Indirect system – reflective of large items such as vehicles (i.e. Ford) and stores that can handle volume storage
Example: sears, the bay
(3) Producer  wholesaler  Retailer  consumer
Indirect System – reflective of law cost/value items that turnover frequently
Example: hostess, Trident gum, magazines
(4) Producer  Agent/Broker  Wholesaler  Retailer Consumer
Many small producers creating rare and expensive products
Example: jewelry
4. Types of wholesalers
(1) Merchant Wholesalers
Full Service
General Merchandise
Full line, broad assortment
Preform all functions (hardware, pharmacy, clothing)
Specialty Merchandise
Limited line, narrow range or products but extensive assortment
Preform al functions (health foods, auto parts, seafood)
Limited Service
Rack Jabbers
Stack racks and shelves
Sell on consignment (toys, housewares, health + beauty)
Cash and Carry
Do not deliver, relate, must pick up (electric + office supplies, some food)
Drop jobbers
Handle large volume/ bulk items (raw material) and drop them at retail location (fuel, coal, lumber, chemicals)

Truck Jobbers
Deliver perishable items frequently, sold for cash directly from truck (baked items, fruit, vegetables, meat + dairy)
(2) Agents/ Brokers + Branch Offices
Deals with primarily services or highly specialized merchandise/ real estate/ investment products.
(3) Manufacturer’s Branches and Offices
Wholly owned extensions of the producer that perform wholesaling activities
Used when there are no intermediaries to perform these activities, there are few customers, and they are geographically concentrated.
5. Factors affecting channel choice
(1) The consumer
Efficiency/ speed of delivery
Convenient location (accessibility)/ access to other services for time
Efficient and positive customer service/ attendant service
Information on the product
(2) The product
Care + packaging (fragile vs. durable items)
Perishability of the product
Intensive vs. extensive distribution (number of locations sold)
(3) The company
Profitability? What method will ensure quality distribution yet be cost effective?
(4) The environment
Weather + Climate considerations
Economy  affordability
Gender roles
Technology
6. Channel design considerations
Best coverage of the target market?
Intensive  as many outlets as possible, convenience items (gum, ATMs, pop)
Exclusive  one outlet in one geographic area
Selective  a few outlets in a specific area
Best satisfy the buying requirements of the target market?
Information  limited knowledge and specific needs
Convenience  proximity and time developed to access
Variety  selection/ breadth and depth
Attendant service  delivery, installation and credit
Most profitability
Profit control  (revenue – expenses)
Cost control  advertising, distribution and selling expenses
7. Physical distribution vs. logistics management
Logistics management
Logistics: all details required to be implemented in order to get the product from producer to consumer
Transportation
Storage/ warehousing
Packaging and handling
Inventory control/ order