A marketing channel consists of individuals and firms involved in the process of making a product or service available for use by consumers or business users.
Intermediaries make possible the flow of products and services from producers to buyers by performing transactional, logistical, and facilitating functions. At the same time, intermediaries create time, place, form, and possession utility.
In general, marketing channels for consumer products and services contain more intermediaries than do channels for business products and services. In some situations, producers use Internet, multiple channels and strategic channel alliances to reach buyers.
Vertical marketing systems are channels designed to achieve channel function economies and marketing impact. A vertical marketing system may be one of three types: corporate, administered, or contractual.
Channel design considerations are based on the target market coverage sought by producers, the buyer requirements to be satisfied, and the profitability of the channel. Target market coverage comes about through one of three levels of distribution density: intensive, exclusive, and selective distribution. Buyer requirements are evident in the amount of information, convenience, variety, and service sought by consumers. Profitability - of each channel member and the channel as a whole - is largely affected by costs and whether or not costs can be shared by members.
Conflicts in marketing channels are inevitable. Vertical conflict occurs between different levels in a channel. Horizon-tal conflict occurs between intermediaries at the same level in the channel.
Logistics involves those activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible cost. Logistics management includes the coordination of the flows of both inbound and outbound goods, an emphasis on making these flows cost effective, and customer service.
A supply chain is a sequence of firms that perform activities required to create and deliver a good or service to consumers or industrial users. Supply chain management is the integration and organization of information and logistics across firms for the purpose of creating value for consumers.
The goals to be achieved by a firm's marketing strategy determine whether its supply chain needs to be more responsive or efficient in meeting customer requirements. Marketers today recognize that the choice of a supply chain involves three steps: (a) understand the customer, (b) understand the supply chain, and (c) harmonize the supply chain with the marketing strategy.
The objective of logistics management in a supply chain is to minimize logistics costs while delivering maximum customer service. Minimizing total logistics cost is irrelevant without specifying an acceptable customer service level that must be maintained. Although key customer service factors depend on the situation, important elements of the customer service program are likely to be time-related dependability, communications, and convenience.
