Transcript 13 Distribution

Chapter 13
Distribution
Channels
©2006 Pearson Education, Inc.
Upper Saddle River, NJ 07458
Marketing for Hospitality and Tourism, 4th edition
Kotler, Bowen, and Makens
“Adversarial power relationships
work only if you never have to see or
work with the other party again.”
-Peter Drucker
©2006 Pearson Education, Inc.
Upper Saddle River, NJ 07458
Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens
Chapter Objectives
• Describe the nature of distribution channels,
and tell why marketing intermediaries are
used
• Understand the different marketing
intermediaries available to the hospitality
industry and the benefits each of these
intermediaries offers
• Know how to use the Internet as a distribution
channel
©2006 Pearson Education, Inc.
Upper Saddle River, NJ 07458
Marketing
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and Tourism,
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Kotler,
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andMakens
Makens
Chapter Objectives
• Discuss channel behavior and organization,
explaining corporate, contractual, and vertical
marketing systems, including franchising
• Illustrate the channel management decisions
of selecting, motivating, and evaluating
channel members
• Identify factors to consider when choosing a
business location
©2006 Pearson Education, Inc.
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and Tourism,
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Kotler,
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Distribution Channels
• 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
• Used to move the customer towards the
product
©2006 Pearson Education, Inc.
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Why Use Marketing
Intermediaries?
• Selling through wholesalers and
retailers usually is much more efficient
and cost effective than direct sales
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Distribution Channel Functions
• Information: gathering and distributing
marketing research and intelligence
information about the marketing
environment
• Promotion: developing and spreading
persuasive communications about an
offer
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Distribution Channel Functions
• Contact: finding and communicating
with prospective buyers
• Matching: shaping and fitting the offer to
the buyer’s needs, including such
activities as manufacturing, grading,
assembling, and packaging
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Distribution Channel Functions
• Negotiation: agreeing on price and other
terms of the offer so that ownership or
possession can be transferred
• Physical distribution: transporting and
storing goods
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Distribution Channel Functions
• Financing: acquiring and using funds to
cover the costs of channel work
• Risk taking: assuming financial risks
such as the inability to sell inventory at
full margin
©2006 Pearson Education, Inc.
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and Tourism,
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Number of Channel Levels
• Channel level can be described as
distribution channels
• Direct marketing channel
• Retailer
• Wholesaler
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Customer Marketing Channels
Customer Marketing Channels
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Marketing Intermediaries
•
•
•
•
•
Travel Agents
Tour Wholesalers
Specialists
Hotel Reps
Concierges
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• National, State,
and Local
Agencies
• Consortia and
Reservation
Systems
• Global Distribution
Systems
• Internet
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Marketing Intermediaries
Travel Agents
Tour Wholesalers
Specialists:
Brokers & Junket Reps
Concierges
Hotel Representatives
Internet
Global Distribution
Systems
National, State,
and Local Tour Agencies
Consortia & Reservations
Systems
©2006 Pearson Education, Inc.
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andMakens
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Channel Behavior
• Channel members are dependent upon
one another and must work together for
the channel to operate successfully
• Members should understand and accept
their roles, coordinate their goals and
activities, and cooperate to attain overall
channel goals
©2006 Pearson Education, Inc.
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Marketing
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Channel Conflict
• Horizontal conflict is conflict between
firms at the same level of the channel
– i.e. retailer to retailer
• Vertical conflict, which is more
common, refers to conflicts between
different levels of the same channel
– i.e. retailer to wholesaler
©2006 Pearson Education, Inc.
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Channel Organization
• A vertical marketing system (VMS)
consists of producers, wholesalers, and
retailers acting as a unified system
• One channel member either owns the
others, has contracts with them, or
wields so much power that they all
cooperate
©2006 Pearson Education, Inc.
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Conventional vs. Vertical
Marketing Channels
©2006 Pearson Education, Inc.
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Vertical Marketing Systems
• Corporate VMS combines successive stages
of production and distribution under single
ownership
• Administered VMS coordinates successive
stages of production and distribution through
the size and power of the parties
• Contractual VMS consists of independent
firms at different levels of production and
distribution who join through contracts to
obtain economies or sales impact
©2006 Pearson Education, Inc.
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Marketing
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Franchising
• Granting the right to engage in offering,
selling, or distributing goods or services
under a marketing format which is designed
by the franchisor
• The franchisor permits the franchisee to use
its trademark, name, and advertising
• Higher survival rates
©2006 Pearson Education, Inc.
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Marketing
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for Hospitality
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and Tourism,
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Kotler,
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Disadvantages – Franchiser
•
•
•
•
Distribution system – other systems can add conflict,
Little Caesars going into K-marts cases conflict with
other Little Caesars in the area.
Consistency
Changing operation – Pizza Hut adding delivery
Advertising expenditures
©2006 Pearson Education, Inc.
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Marketing
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Franchisee – Advantages
Marketing
Support
Brand Name
Contracts
Plans and
Systems
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Reservation systemsCustomers
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Franchisee – Disadvantages
•
•
•
Value of brand name determined by
franchiser
Introduction of new products determined
by franchiser
Your reliability tied to the rest of the
system
©2006 Pearson Education, Inc.
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Marketing
Marketing
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A Franchise is Only as
Strong as –
Brand Name
Market demand for
the product
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Competitive Advantage
system
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Channel Organization
• Alliances are developed to allow two
organizations to benefit from each other’s
strengths
• Horizontal marketing systems are two or
more companies at one level that join to
follow a new marketing opportunity
• Multichannel marketing occurs when a
single firm sets up two or more marketing
channels to reach one or more customer
segments
©2006 Pearson Education, Inc.
Upper Saddle River, NJ 07458
Marketing
Marketing
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for Hospitality
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and Tourism,
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Kotler,
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andMakens
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Selecting Channel Members
• Customer Needs
• Attracting Channel Members
• Evaluating Major Channel Alternatives
– Economic Feasibility of the Channel
Member
– Control Criteria
©2006 Pearson Education, Inc.
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Marketing
Marketing
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and Tourism,
4th edition
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Kotler,
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Bowen,and
andMakens
Makens
Business Location
1. Understand the marketing strategy and
target market of the company
2. Conduct a regional analysis, which involves
the selection of geographic market areas
3. Select an area within that region
4. Choose individual sites
©2006 Pearson Education, Inc.
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Marketing
Marketing
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for Hospitality
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and Tourism,
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Kotler,
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Bowen,and
andMakens
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Best Practices
•
•
•
•
•
Expedia
Orbitz
Priceline
Travelocity
Trip
©2006 Pearson Education, Inc.
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Marketing
Marketing
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for Hospitality
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and Tourism,
4th edition
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Kotler,
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Bowen,and
andMakens
Makens
Key Terms
• Administrative VMS
• Agent
• Alliances
• Broker
©2006 Pearson Education, Inc.
Upper Saddle River, NJ 07458
Marketing
Marketing
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for Hospitality
and Tourism,
and Tourism,
4th edition
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Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens
Key Terms
• Channel conflict
• Channel level
• Contractual VMS
• Corporate VMS
©2006 Pearson Education, Inc.
Upper Saddle River, NJ 07458
Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens
Key Terms
• Direct marketing channel
• Franchise organization
• Horizontal conflict
• Horizontal marketing systems (HMS)
©2006 Pearson Education, Inc.
Upper Saddle River, NJ 07458
Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens
Key Terms
•
•
•
•
•
Multichannel marketing
Retailer
Vertical conflict
Vertical marketing system (VMS)
Wholesaler
©2006 Pearson Education, Inc.
Upper Saddle River, NJ 07458
Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens