Chapter 3 channel structureChapter 3 channel structure

length intensity breadth organizational structure

0 -channels Exclusive distribution

single Traditional distribution system

One-level channel

Selective distribution

multiple Vertical distribution system

Two channels Intensive distribution

Horizontal distribution

systemThree channels

Section 1 length structure Section 1 length structure

一 . zero-channel (direct channel, short channel)

1. meaning

2. characteristicsIn zero-Channels, there are only manufacturers and users,

but no middleman.Commodities belong to manufactures before sale.Ownership of goods transfer from producers to users thro

ugh only one time.Manufacturers Possess all of sales revenue and profits.

3. With regard to direct selling

1886 年，雅芳公司在美国创造性地通过“雅芳小姐”以单层次直销方式销售香水，展开了现代直销史的篇章。 1945 年纽崔莱公司发展出多层次直销“团队计酬”的奖金制度，多层次直销开始渐成风尚。上世纪 90 年代初，直销模式引入中国 。（ 1990年 11 月，美国雅芳公司经中国广州市人民政府批准，投资 2795 万美元与广州化妆品厂合资成立广州雅芳有限公司 ） .

Basic characteristics ：1 ： It is sale person to person or face to face, which distin

guishes it from direct marketing. 2 ： Usually the sale is not accomplished in stores, which

excludes direct selling in store.

Conclusion       Direct sale is the form of non-store selling, including direct selling 、 direct marketing.

The direct selling includes two schemes : the single-level and multi-level marketing; the latter is known as pyramid selling in our country .

Discussion:

Direct selling = Direct channels?

There is a widely spread but not right opinion; that is putting direct marketing the same as direct channel.

In fact, direct sale Does not mean direct channel. Direct channels are compared with the indirect channels, while direct sale is a form of non-store marketing;

Direct sale can be in direct channels (such as personal selling), as well as indirect channels (such as a cosmetics firm commissioned a direct-sales company selling ).

4. emerging conditions

5. advantages analysis:Advantage: Realizing the integration of developmental stra

tegy; easy to control; strengthen serves ; Shortcoming: Does not suit products widespread retailing;

increasing expense ; decentralizing energy.

case ： Honda 、 Amway 、 DELL

二 indirect channels

1. The meaning ,pattern and characteristics

2. Advantage AnalysisFocus on resources of production; simplify transactions, extensive distribution; Super services, risk-sharing.

3. Disadvantage analysis

difficult to communicate information directly heavy burden on consumers ;market instability, difficult to control

Examples: mobile, Wahaha

GSM: 厂商 ---- 全国总代 ---- 二级代理 --- 零售 ---- 用户

CDMA/GPRS:

厂商 ---- 运营商 --- 自有代理体系 ---- 用户

1987 年 14 万 4 分冰棒；1989 年营养食品厂； 1991 年集团分销的三个阶段“ 联销体”的运行模式价差、区域、品种和节奏

Section 2 breadth structure Section 2 breadth structure

1. Exclusive distributionMeaning: The manufacturer ， at a certain place ， select

s only a intermediate institution （ between the same type ） to carry out the distribution of merchandise.

Advantages: easy to control, low-cost promotion. Disadvantages : lack of competition, low market coverage, Over dependence.case ：志高

维修到 1998 年公司 --- 省级总代理 --- 批发 --- 零售成员分工：分销、促销、售后服务

2. Selective distributionAdvantages: easier to control, greater market coverage.Problem: difficult to select brokers, fierce competition

Case: Nike

3. Intensive distributionAdvantages: great market coverage 、 high rate of custom

er contacts, making full use of middlemen. problems: difficult to control 、 high-cost and intensive c

ompetition

Coca cola's channel Coca cola's channel

一、 target market二、 distribution goal3A: 3P:Availability Pervasive Affordability Price to valueAcceptability Preferred三、 distribution channelHead office--- 中国控股、嘉里、太古、中粮 ------ope

ration office---retailers （ 22 channels ）

Breadth comparison Breadth comparison

category Distributors amount

Market coverage

competition

control Suitable products

exclusive single small weak strong Special or new products

selective limited middle Relatively fierce

Relatively strong

Selective goods

intensive

multiple broad fierce strong daily necessities

Section 3 the breadth Section 3 the breadth

1. meaning

In addition to choosing which type of intermediary to use and how many of them to use, the channel manager must also decide whether to operate one or multiple channels in a market. Whenever more than one channel coexists in a market, that is dual distribution.

Advantages: an increase of market coverage; lower channels cost; customers customized sales.

Problem: more than two channels, easy to reach conflict.

Conflict resolution 1: customer segmentation (P121)

Conflict resolution 1: customer segmentation (P121)

Conflict resolution 2: product segmentation

Conflict resolution 2: product segmentation

Conflict resolution 3: integration

Enterprise goal and channel selectionEnterprise goal and channel selection

length breadth broadness

direct indirect

concentricity selectivity intensity

Simplific-ation

diversification

Max sale √ √ √

Mix cost √ √ √

Best reputation

√ √ √

Strongest control

√ √ √

Highest stock ratio

√ √ √

Mix conflicts

√ √ √

Section 4 organization (system) structure Section 4 organization (system) structure

1. Traditional channel system this structure is also called loose-type channel.

The Channel is formed by various independent members; each member pursues the maximization of their profits; no member have full or adequate control over the other members.        

Commonly used by small and medium enterprises.

2. vertical channel system

It is an unified coalition created by the producers wholesalers and retailers through property rights, contracts, etc. In this system ,each member is a part of the entire system. Includes three forms:

Vertical system

Corporate model

Contractmodel

Management model

Franchised operating

organizationWholesaler

chainRetail

cooperator

2.1 vertical marketing system of Company2.1 vertical marketing system of Company

Also known as the “rigid” integration or vertical integration organizations.

Refers to a company owning and controlling a number of manufacturing 、 wholesale and retail organizations; controlling a number of flows and even all the flows of the distribution; operating and unifying management of production, wholesale and retail business.

There are property rights links.

Case: Haier, Suning

2.2 Vertical marketing system of contract  

an integration organization of “flexibility”! Type:

      • Voluntary Chain       • retail co-operation      • Franchise

2.3 vertical marketing system of Management

An integrated organization of “flexibility” refers to channel relations : big company or minority nam

ely several strengths with the good brand prestige depending upon own influence, gather the numerous distributors through the powerful management.

The characteristic is: A core 、 stable relation 、 consistent goal 、 social resource use.

Case: P&G Wal-Mart

3. Horizontal marketing system 3. Horizontal marketing system

Two or more non-associated companies integrate their resources or programs to develop a marketing opportunity.

Adler said : it is symbiotic marketing.