Marketing Chapter 12 Homework Vertical Marketing System Slide 126 Vertical Marketing

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Chapter 12: Distribution Channels Delivering Customer Value

Chapter Objectives

1. Describe the nature of distribution channels, and tell why marketing intermediaries are

used.

3. Discuss channel behavior and organization, explaining corporate, contractual, and

vertical marketing systems, including franchising.

5. Identify factors to consider when choosing a business location.

Teaching Suggestions

The following explanations and suggestions are outlined based on the Chapter Objectives.

1. Describe the nature of distribution channels, and tell why marketing intermediaries

are used.

A good discussion topic to get your students thinking about distribution channels is to ask

them to think about the last time they planned a trip somewhere. Which websites (or

apps) did they visit during this process? Many students will have conducted some portion

of their research on OTA sites like Travelocity, Expedia or Hotels.com. Why did they

choose to conduct their research this way?

A distribution channel is a set of independent organizations involved in the process of

2. Understand the different marketing intermediaries available to the hospitality

Many specialized channels are available to hospitality and travel organizations. These

include: travel agents; tour wholesalers; specialists; hotel representatives; national, state,

and local tourist agencies; consortia and reservation systems; global distribution systems;

the Internet; and concierges. Table 12-1 illustrates the cost of different distribution

channels for hotels.

Below is a list of some benefits associated with each of the key types of intermediaries:

Direct booking: Managers often like to encourage direct booking because of the

3. Discuss channel behavior and organization, explaining corporate, contractual, and

vertical marketing systems, including franchising.

For the channel as a whole to perform well, each channel member’s role must be

specified, and channel conflict must be managed. The channel will perform better if it

includes a firm, agency, or mechanism that provides leadership and has the power to

assign roles and manage conflict.

Corporate VMS: Coordination and conflict management are attained through

4. Illustrate the channel management decisions of selecting, motivating, and evaluating

channel members.

Selecting channel members involves a number of factors, including customer needs, the

5. Identify factors to consider when choosing a business location.

One of the most important aspects of distribution for hospitality organizations is location

s Jr.). In general, there are four steps in choosing a location:

Understanding the marketing strategy and target market of the company

Chapter Outline

I. Supply Chains and the Value Delivery Network [Slide 12-3]

II. Nature and Importance of Distribution Systems. A distribution channel is a set of

independent organizations involved in the process of making a product or service

available to the consumer or business user.

L. Reasons that marketing intermediaries are used. The use of intermediaries

operation, intermediaries normally offer more than a firm can on its own.

M. Distribution channel functions [Slide 12-4]

1.Information. Gathering and distributing marketing research and

intelligence information about the marketing environment.

3.Contact. Finding and communicating with prospective buyers.

5.Negotiation. Agreeing on price and other terms of the offer so that

ownership or possession can be transferred.

7.Financing. Acquiring and using funds to cover the cost of channel work.

N. Number of channel levels. The number of channel levels can vary from direct

III. Hospitality Distribution Channels

F. Major hospitality distribution channels [Slide 12-5]

7.Online travel agencies

9.Travel agents

11. Specialists: tour brokers, motivational houses, and junket reps

13. National, state, and local tourist agencies

15. Restaurant distribution systems

IV. Channel Behavior

A. Channel conflict. Although channel members depend on each other, they often act

alone in their own short-run best interests. They frequently disagree on the roles

each should play on who should do what for which rewards.

V. Channel Organization. Distribution channels are shifting from loose collections of

independent companies to unified systems.

A. Conventional marketing system. A conventional marketing system consists of one

B. Vertical marketing system. [Slide 12-6] A vertical marketing system consists of

producers, wholesalers, and retailers acting as a unified system. VMSs were

2.Administered. An administered VMS coordinates successive stages of

3.Contractual. [Slide 12-7] A contractual VMS consists of independent

firms at different levels of production and distribution who join through

contracts to obtain economies or sales impact.

a. Franchising. [Slide 12-8] Franchising is a method of doing

C. Horizontal marketing system. [Slide 12-9] Two or more companies at one level

VI. Selecting Channel Members

A. Customer needs

B. Attracting channel members

C. Evaluating major channel alternatives [Slide 12-10]

VII. Responsibilities of Channel Members and Suppliers. The company and its intermediaries

must agree on the terms and responsibilities of each channel member. According to the

VIII. Business Location. [Slide 12-11] There are four steps in choosing a location:

A. Understanding the marketing strategy. Know the target market of the company.

Answers to Discussion Questions

1. Discuss how you think technology will change distribution channels in the

hospitality and travel industries over the next five years.

This is an excellent topic for class discussion. For example, technology is continuing its

2. Explain how international travel changed distribution channels in the hospitality

and travel industries.

Increased international travel has changed the makeup of the channel systems as well as

3. What are the major differences between a distribution channel for a business

making tangible products and a firm producing hospitality and travel products?

A distribution channel moves goods from producers to consumers. It overcomes the

4. Can a business have too many channel members? Explain your answer.

5. Explain the difference between a tour wholesaler and a travel agent.

This is a good assignment question. Ask your students to research the differences

between tour wholesalers and travel agents. For example, tour wholesalers assemble

6. Why is franchising such a fast-growing form of retail organization?

Ask your students to research the costs and benefits associated with buying a franchise.

7. According to the International Franchising Association, between 30 and 50 percent

of all new franchise applicants are people who formerly worked in large

corporations and who lost their jobs as a result of corporate downsizing. How do

you think these midlevel, midcareer corporate executives will adapt to life as

franchise owners? How will their previous corporate experience help them? How

will it hurt them?

This is a good topic for class discussion. For example, former corporate experience will