Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e
- Place and Development
of Channel Systems
Text © The McGraw−Hill
Companies, 2002Place and Development of Channel Systems 325companies may need to recycle empty bottles. And of course, at some point or other,
most consumers buy something in error and want to return it. For example, this is
quite common with online purchases where consumers can’t see, touch, or try the
actual product before purchasing it.^26
Another problem arises from products that are damaged in shipping or discon-
tinued. Most manufacturers take them back. For example, until recently P&G had
a reclamation center that took back thousands of products, ranging from damaged
boxes of Tide to leaking bottles of Crisco Oil. A grocery products trade group says
that the cost of such unsalable products, in total, may be as much as $4 billion a
year. This has prompted P&G to change its policies. Now, P&G has adopted a no-
returns policy and instead gives retailers a payment for damaged items. The system
is designed to reduce the cost of returns to both P&G and retailers. Ultimately, that
cost must be paid by consumers. Some retailers don’t like P&G’s policy, but it is
important to see that it is a specific plan and part of an overall strategy.
When marketing managers don’t plan for reverse channels, the firm’s customers
may be left to solve “their” problem. That usually doesn’t make sense. So a com-
plete plan for Place may need to consider an efficient way to return products—with
policies that different channel members agree on. It may also require specialists who
were not involved in getting the product to the consumer. But if that’s what it takes
to satisfy customers, it should be part of marketing strategy planning.^27ConclusionIn this chapter, we discussed the role of Place and
noted that Place decisions are especially important be-
cause they may be difficult and expensive to change.
Marketing specialists, and channel systems, develop
to adjust discrepancies of quantity and assortment. Their
regrouping activities are basic in any economic system.
And adjusting discrepancies provides opportunities for
creative marketers.
Channel planning requires firms to decide on the de-
gree of market exposure they want. The ideal level of
exposure may be intensive, selective, or exclusive. They
also need to consider the legality of limiting marketexposure to avoid having to undo an expensively devel-
oped channel system or face steep fines.
The importance of planning channel systems was
discussed—along with the role of a channel captain. We
stressed that channel systems compete with each other
and that vertical marketing systems seem to be winning.
In this broader context, the “battle of the brands” is
only a skirmish in the battle between various channel
systems. And we emphasized that producers aren’t nec-
essarily the channel captains. Often middlemen control
or even dominate channels of distribution.Questions and Problems- Review the case at the beginning of the chapter and
explain why Amazon.com would use a wholesaler
like Ingram. - Give two examples of service firms that work with
other channel specialists to sell their products to fi-
nal consumers. What marketing functions is the
specialist providing in each case? - Discuss some reasons why a firm that produces installa-
tions might use direct distribution in its domestic
market but use middlemen to reach overseas customers.
4. Explain discrepancies of quantity and assortment
using the clothing business as an example. How
does the application of these concepts change when
selling steel to the automobile industry? What im-
pact does this have on the number and kinds of
marketing specialists required?
5. Explain the four regrouping activities with an exam-
ple from the building supply industry (nails, paint,
flooring, plumbing fixtures, etc.). Do you think that
many specialists develop in this industry, or do