Page 398 - Foundations of Marketing

Marketing Channels and Supply-Chain Management | Chapter 13 365

these outlets at a disadvantage. In fact, even Dell—which pioneered the direct-sales model
in the computer industry—also sells its computers at Best Buy. The option of buying Dell
systems directly from Dell or in retail stores like Best Buy means that customers can purchase
what they need when and where they want. The in-store option gives customers a chance to
test out computers in person before making a purchase.
Marketing channel decisions have strategic significance because they generally entail
long-term commitments among a variety of firms (e.g., suppliers, logistics providers, and
operations firms). Once a firm commits to a distribution channel, it is difficult to change.
Marketing channels also serve multiple functions, including creating utility and facilitat-
ing exchange efficiencies. Although some of these functions may be performed by a single
channel member, most functions are accomplished through the joint efforts of channel
members.

Marketing Channels Create Utility

Marketing channels create four types of utility: time, place, possession, and form. Time utility
means making products available when the customer wants them. Services like Movies On
Demand or streaming on Netflix allow customers to watch a movie or show whenever they
want. Place utility is making products available in locations where customers wish to purchase
them. For example, Zappos allows customers to shop for shoes and accessories anywhere
they have access to a mobile device and an Internet connection. Possession utility means that
the customer has access to the product to use or to store for future use. Possession utility can
occur through ownership or through arrangements that give the customer the right to use the
product, such as a lease or rental agreement. Channel members sometimes create form utility
by assembling, preparing, or otherwise refining the product to suit individual customer needs.

Marketing Channels Facilitate Exchange Efficiencies
Even if producers and buyers are located in the same city, there are costs associated with
exchanges of goods and services. Marketing intermediaries can reduce these expenses by

Entrepreneurship in Marketing

Is Brick-and-Mortar the Future for Bonobos?

When cofounders Andy Dunn and Brian Spaly started Nordstrom, which also became an investor. This allowed
Bonobos in 2007 to market men’s pants that look Bonobos to add a new channel, reaching out to men who
good, fit well, and feel comfortable, they decided to shop in Nordstrom’s high-end specialty stores and on
sell directly to customers, online only. Four years Nordstrom’s ecommerce website.
after Bonobos opened its virtual doors, it was already Dunn also decided to supplement the Bonobos
ringing up $ 1 million in monthly revenue, with Dunn online store with brick-and-mortar “guideshops.” These
as CEO. are company-owned showrooms in New York, San
By 2012, Bonobos was well established and flour- Francisco, Boston, Chicago, and other major cities where
ishing, but it was also facing fierce online competition customers can try on different styles and sizes to find the
and spending more to attract new customers. Dunn perfect fit. Unlike traditional stores, the guideshops serve
realized that he could increase sales by providing more customers by appointment only—and all purchases are
opportunities for customers to see Bonobos clothing, completed through the Bonobos online store. Will brick-
feel the fabrics, and try on different items before mak- and-mortar be the distribution strategy that fuels future
a
ing a purchase. So he struck a distribution deal with profit for Bonobos?

© iStockphoto.com/CRTd

Copyright 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.