Marketing Channel Strategy



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Marketing Channel Strategy An Omni-Channel Approach

Manufacturer Direct.
Product shipped and serviced from manufacturer’s 
warehouse. Sold by company sales force or agents. The wide variety of products 
appeals to customers with few service needs and large orders. Many manufacturer- 
direct companies also sell through wholesaler-distributors.
Examples: Hewlett-Packard, IBM, and General Electric sell to their largest 
customers using a direct sales force.
2. 
Manufacturer-Owned Full-Service Wholesaler Distributor.
An acquired 
wholesale distribution company serving the parent’s and other manufactur-
ers’ markets. Typically, diverse product lines in an industry support synergies 
between a company’s manufacturing and distribution operations. Because 
of customer demand, some companies also distribute other manufacturers’ 
products.


The OmnI-ChAnnel eCOsysTem
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Examples: Revlon, Levi-Strauss, Kraft Foodservice, GESCO, clothing and 
apparel products.
3. 
Company Store/Manufacturer Outlets.
Retail product outlets in 
high-density markets; often used to liquidate seconds or excess inventory of 
branded consumer products.
Examples: Outlet malls, hostess bakery outlets.
4. 
License.
Contracting distribution and marketing functions through licensing 
agreements, which usually grant exclusivity for some period of time. Often 
used for products in the development stage of their lifecycle.
Examples: Mattel, Walt Disney, importers.
5. 
Consignment/Locker Stock.
Manufacturer ships the product to the point 
of consumption, but title does not pass until consumed. Risk of obsolescence 
and ownership remains with manufacturer. Focus on high-price/high-margin 
and emergency items.
Examples: Diamonds, fine art galleries, machine repair parts.
6. 
Broker.
Specialized sales force contracted by manufacturer that also carries 
comparable product lines and focuses on a narrow customer segment; product 
is shipped through another format, such as the preceding options. Typically 
used by small manufacturers attempting to attain broad coverage.
Examples: Schwan’s frozen foods, paper goods, lumber, newer product lines.
Retailer-Based Channel Formats
1. 
Franchise.
Product and merchandising concept is packaged and formatted. 
Territory rights are sold to franchisees. Various distribution and other services 
are provided by contract to franchisees for a fee.
Examples: KFC, McDonald’s.
2. 
Dealer Direct.
Franchised retailers carry a limited number of product lines 
supplied by a limited number of vendors. Often these big-ticket items need 
substantial after-sales service support.
Examples: Heavy equipment dealers, auto dealers.
3. 
Buying Club.
Buying services requiring membership. Good opportunity for 
vendors to penetrate certain niche markets or experiment with product varia-
tions. They also provide buyers with a variety of consumer services; today, they 
are largely consumer-oriented.
Examples: Compact disc/tape clubs, book clubs.
4. 

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