Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic

Marketing: A

Global−Managerial

Approach, 14/e

11. Place and Development
    of Channel Systems

Text © The McGraw−Hill

Companies, 2002

ct

place

price

promotion

product

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303

books. Many small publishers

with whom they worked also

had troubles.

At the Intimate, competitors

had chipped away at sales over

the years. But the coffin nail

was not driven by mail-order

book clubs, or by the religious

book store that opened in town,

or even by used textbook bro-

kers who ate into that business.

Rather, the bigger issue was

the big national chains. They

had buying clout with publish-

ers and could demand lower

prices for larger quantities.

They also had aggressive mar-

keting programs to woo

consumers. The Intimate had

lost some customers to the

frequent-buyer discount and

special-order service at Walden

Books. Others went to Barnes

and Noble for the selection—

and the coffee bar. Wal-Mart

carried only a few best-sellers,

but its low prices turned shop-

pers into impulse buyers. Some

of the Intimate’s ex-customers

were no longer shopping in any

store. Rather, they were order-

ing books online from

Amazon.com.

Operating from its website,

Amazon offers consumers an

amazing selection of over two

million books. As Amazon ads

pop up on-screen, web surfers

may think the selection is even

greater. But Bollic knew that in

reality Amazon’s warehouse

keeps inventory on only a

couple thousand of the

fastest-selling books. That’s

because Amazon fills most

orders through wholesalers.

And that takes us back to

Ingram Book Group. It has

been the hidden giant behind

many big book retailers,

including Internet sellers. For

example, in 1998 it handled

more than 60 percent of

Amazon’s orders. At the

same time it was a major sup-

plier for Barnes and Noble.

There are good reasons. Its

distribution customer service

is hard to match. Orders flow

into Ingram’s computers