Page 442 - Marketing Management

DESIGNING AND MANAGING INTEGRATED MARKETING CHANNELS | CHAPTER 15 419

TABLE 15.1 Channel Member Functions

• Gather information about potential and current customers, competitors, and other actors and
forces in the marketing environment.
• Develop and disseminate persuasive communications to stimulate purchasing.

• Negotiate and reach agreements on price and other terms so that transfer of ownership or
possession can be affected.
• Place orders with manufacturers.

• Acquire the funds to finance inventories at different levels in the marketing channel.
• Assume risks connected with carrying out channel work.
• Provide for the successive storage and movement of physical products.
• Provide for buyers’ payment of their bills through banks and other financial institutions.

• Oversee actual transfer of ownership from one organization or person to another.

The question for marketers is not whether various channel functions need to be performed—
they must be—but rather, who is to perform them. All channel functions have three things
in common: They use up scarce resources; they can often be performed better through
specialization; and they can be shifted among channel members. Shifting some functions to in-
termediaries lowers the producer’s costs and prices, but the intermediary must add a charge to
cover its work. If the intermediaries are more efficient than the manufacturer, prices to con-
sumers should be lower. If consumers perform some functions themselves, they should enjoy
even lower prices. Changes in channel institutions thus largely reflect the discovery of more ef-
ficient ways to combine or separate the economic functions that provide assortments of goods
to target customers.

1. Physical Flow
Transporters, Transporters,
Suppliers Manufacturer Dealers Transporters Customers
warehouses warehouses

2. Title Flow
Suppliers Manufacturer Dealers Customers

3. Payment Flow
Suppliers Banks Manufacturer Banks Dealers Banks Customers

4. Information Flow
Transporters, Transporters, Transporters,
Suppliers warehouses, Manufacturer warehouses, Dealers banks Customers
banks banks

5. Promotion Flow
Advertising Advertising
Suppliers Manufacturer Dealers Customers
agency agency
|Fig. 15.1|
Five Marketing Flows in the Marketing Channel for Forklift Trucks