Page 218 - DMGT408DMGT203_Marketing Management

Unit 9: Managing Marketing Channels

Wholesalers of all shapes and sizes cater to large number of retail stores, including rural markets. Notes
Tobacco products, tea, and laundry products etc. are typical examples where wholesalers and
retailers operate between manufacturers and consumers.
Three-level channel arrangement involves intermediaries at three levels. The manufacturer
does not handle any distribution functions and appoints sole agents with substantial resources
or C&F agents. They have their own network of wholesalers, and retailers all over the country.
This kind of arrangement may also be on territorial basis. C&F agents handle only distribution
functions. Sole selling agents may also handle personal selling on behalf of producer besides
taking care of distribution. This is a fairly common practice in India among pharmaceutical
manufacturers lacking resources to handle personal selling and distribution functions.
Another channel option is strategic channel alliance. This refers to an arrangement when another
company through its own marketing channels sells the products of one producer. For example,
a soft drink company may distribute the bottled water of another manufacturer, or a domestic
company might distribute the product of a foreign company.
Traditional channels discussed above refer to forward movement of products from producer to
consumer. Some producers must also plan for channel intermediaries performing the role of
reverse-flow channels to retrieve products that customers no longer want.

Example: Auto firms, drug companies, toy manufacturers, and others sometimes have
to recall products due to defects, breakage, safety reasons, and repairs during warranty period.
They, including producers, help in reversing the flow of certain types of containers for reuse,
computer circuit boards for refurbishing and resale, paper, cardboards, and metals etc. for
recycling.

Task Go to a supermarket and study what kind of marketing channel is
being used. Write a report on it including your recommendations for
improvement in channel design.

9.2.2 Industrial Product Channels

Industrial products manufacturers include any company that manufacturers or markets a product
or service not intended to be used exclusively for mass consumer marketing. The manufacturer
or marketer of the product is considered to be the product source whether it actually produces
the product or ha it produced by contract. Industrial product manufacturers and the companies
who market their products need to develop specific relationships with each of their channel
members, learning their needs and facilitating their capabilities.

Products for industrial uses are normally researched and produced for the specific needs of the
markets they serve. Markets are not created for products; rather, products are researched and
developed for the markets. This relationship is not as common in industries that product for the
nonindustrial market. In many of the industrial product industries, the users of the manufactured
products are themselves producers or manufacturers. These users buy products from the
marketing channel not for personal consumption but for the operation of their business. This
relationship to the products used affects the development and management of the marketing
channel structure differently than with the users who are not producers themselves, but are true
consumers. The primary difference is centered in the measurable value of the industrial product
whose use is motivated by need rather than by want. These products are purchased for their
utility. The satisfaction of the need is measured by product value and intrinsic worth.

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