CHAPTER 14
Marketing Channels and Supply-Chain
Management
TEACHING RESOURCES QUICK REFERENCE GUIDE
Resource
Location
Purpose and Perspective
IRM, p. 277
Lecture Outline
IRM, p. 278
Discussion Starters
IRM, p. 291
Class Exercise
IRM, p. 293
Semester Project
IRM, p. 296
Answers to Developing Your Marketing Plan
IRM, p. 297
Answers to Discussion and Review Questions
IRM, p. 298
Comments on the Cases
IRM, p. 302
Video Case 14.1
IRM, p. 302
Case 14.2
IRM, p. 303
Examination Questions: Essay
Cognero
Examination Questions: Multiple-Choice
Cognero
Examination Questions: True-False
Cognero
PowerPoint Slides
Instructor’s website
Note: Additional resources may be found on the accompanying student and instructor websites at
www.cengagebrain.com.
PURPOSE AND PERSPECTIVE
In this chapter, we focus on marketing channels and supply-chain management. First, we explore the
concept of the supply chain and its various activities. Second, we elaborate on marketing channels and the
need for intermediaries and the primary functions they perform. Next, we outline the types and
characteristics of marketing channels, discuss how they are selected, and explore how marketers
determine the appropriate intensity of market coverage for a product. We then examine the strategic
channel issues of leadership, cooperation, and conflict. We also look at the role of physical distribution
within the supply chain, including its objectives and basic functions. Finally, we look at several legal
issues that affect channel management.
Chapter 14: Marketing Channels and Supply–Chain Management 280
5. Marketing Channels Facilitate Exchange Efficiencies
a. Marketing intermediaries can reduce the costs of exchanges by performing certain
services or functions efficiently. Intermediaries provide valuable assistance because of
their access to and control over important resources used in the proper functioning of
1. Multiple distribution paths have been developed because different products require different
marketing channels. Marketing channels can be classified as for consumer products or for
business products.
2. Channels for Consumer Products (see Figure 14.2)
a. Channel A moves goods directly from the producer to consumers.
b. Channel B, which moves goods from the producer to a retailer and then to customers, is a
frequent choice of large retailers because it allows them to buy in quantity from
3. Channels for Business Products (see Figure 14.3)
a. Channel E illustrates the direct channel for business products, which is the most popular
channel for business products. Business customers like to directly communicate with
producers, especially when expensive or technically complex products are involved.
b. With Channel F, an industrial distributor is an independent business that takes title to
Chapter 14: Marketing Channels and Supply–Chain Management 281
(2) Industrial distributors are most effectively used when a product has broad market
appeal, is easily stocked and serviced, is sold in small quantities, and is needed on
demand to avoid high losses.
(3) They offer sellers several advantages, such as performing the needed selling activities
complementary products of several producers in assigned territories and is compensated
through commissions.
(1) Using manufacturers’ agents can benefit a business marketer because these agents
possess considerable technical and market information and have an established set of
customers.
maintain a sales force or when a marketer wants to enter a new geographic market
without expanding the sales force.
4. Multiple Marketing Channels and Channel Alliances
a. To reach diverse target markets, manufacturers may simultaneously use several
marketing channels, with each channel involving a different set of intermediaries. This is
1. Channel selection decisions usually are significantly affected by one or more of the following
2. Consumer Characteristics
a. Business customers often prefer to deal directly with a producer (or very knowledgeable
channel intermediaries, such as industrial distributors), and they are more likely to buy
complex products, requiring strict specifications and technical assistance and/or to buy in
Chapter 14: Marketing Channels and Supply–Chain Management 282
c. When customers are concentrated in a small geographic area, a more direct channel may
be ideal, but when many customers are spread across an entire state or nation, distribution
through multiple intermediaries is likely to be more efficient.
3. Product Attributes
a. The attributes of the product can have a strong influence on the choice of marketing
channels.
4. Type of Organization
a. Due to their sheer size, larger firms may be better able to negotiate better deals with
vendors or other channel members.
5. Competition
a. The success or failure of a competitor’s marketing channel may encourage or dissuade an
6. Environmental Forces
a. Adverse economic conditions might force an organization to use a low-cost channel, even
though customer satisfaction is reduced, whereas a booming economy might allow a
1. An organization may reconsider its channel choices if it feels that an intermediary is not
adequately promoting its products.
2. Some firms may choose to eliminate intermediaries and perform the eliminated