©2000PrenticeHallObjectivesWorkPerformedbyMarketingChannelsChannel-DesignDecisionsChannel-ManagementDecisionsChannelDynamics©2000PrenticeHallHowaDistributorReducestheNumberofChannelTransactions=Customer=ManufacturerA.NumberofcontactswithoutadistributorMxC=3X3=9132456789©2000PrenticeHallHowaDistributorReducestheNumberofChannelTransactions=Distributor=Customer=ManufacturerB.NumberofcontactswithadistributorMxC=3+3=6Store123456©2000PrenticeHallDistributionChannelFunctionsOrderingPaymentsCommunicationTransferNegotiationFinancingRiskTakingPhysicalDistributionInformation©2000PrenticeHallCustomers’DesiredServiceLevelsLotsizeWaitingtimeSpatialconvenienceProductvarietyServicebackup©2000PrenticeHallChannelManagementDecisionsSelectingFEEDBACKMotivatingTrainingEvaluating©2000PrenticeHallTypesofVerticalMarketingSystemsCorporateCommonOwnershipatDifferentLevelsoftheChannelContractualContractualAgreementAmongChannelMembersAdministeredLeadershipisAssumedbyOneoraFewDominantMembers©2000PrenticeHallConventionalDistributionChannelvs.VerticalMarketingSystemsVerticalmarketingchannelManufacturerRetailerConventionalmarketingchannelConsumerManufacturerConsumerRetailerWholesalerWholesaler©2000PrenticeHallCausesofChannelConflictIncompatibilityDifferenceinPerceptionDependenceLegal&EthicalIssuesinChannelRelationsExclusiveDealingExclusiveTerritoriesTyingAgreementsDealers’Rights