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Place (Marketing Channel)

Most producers do not sell their goods directly

to the final users, between them stands a set of

intermediaries

These intermediaries constitute the marketing

channel (trade channel or distribution channel)

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Channel plays a pivotal role in value delivery

Time utility and place utility enhancing the chance

of sale

Supplies several products, in suitable assortments, asrequired

Breaks the bulk and caters to small-size needs of

consumers quantity/form utility

Takes care of the various flows involved indistribution

Connects the Consumers to the Firm

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Marketing Channel Flows

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What is a Marketing Channel?

A marketing channelsystem isthe

particularsetof interdependentorganizations involved in the process of

making a productorservice available for

use or consumption.

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Channel functions cannot be eliminated

Channel viewed as middlemen parasites

Channels are essential and valuable part ofa firm

While channels can be eliminated the

channel functions and the costs thereof

cannot be eliminated and just gets

transferred to the firm

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Channel advantages Minimises the number of contacts needed for reaching

consumers

Provides salesmanship Helps in price mechanism

Takes care of a part of physical distribution and financing

Assists in merchandising

Provides market intelligence

Acts as change agents and generates demand

A vital source of competitive advantage for the firm

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Channels and Marketing Decisions

A push strategy usesthemanufacturerssales force,tradepromotion money, and othermeansto induceintermediariesto carry, promote, andsellthe productto

end users. A pull strategy uses advertising, promotion, and other

forms of communication to persuade consumerstodemandthe productfrom intermediaries.

Coca cola, Intel and Nikeemploy both push and pull

strategies Hybrid channels (HPusessales force,telemarketing,

directmailing, retailing and internetas channels)

Channel integration

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Buyer Expectations forChannel Integration

Ability to order a product

online and pick it up at a

convenient retail location

Ability to return an online-ordered product to a nearby

store

Right to receive discounts

based on total online andoffline purchases

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Categories ofBuyers

Habitual shoppers

High value deal seekers

Variety-loving shoppers

High-involvement shoppers

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Rural Distribution

Traditional Channelsfor Reaching Out toRural Customers

Haats

Mandis

Melas

Innovative DistributionChannels for RuralMarkets

Hub and Spokemodel

Mobileshops and offices

Linkage with communitybased organizations

(SHGs, NGOs, and

cooperatives)

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The Value-Adds vs. Costs of

Different Channels

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Channel levels

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Channel levels Channel Level and Channel Member

A zero level channel (direct marketing channel) consists of a

manufacturer selling directly to a customer Door to door sales, mail order, telemarketing, internet sales, own

stores

Examples Otto Burlington (mail order), Tupper ware (homeparties), Eureka Forbes and aqua guard (door to door sales), Asiansky shop (TV), Raymond having own stores

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Raymond

presentsworld-class

experience

through itsstores

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e-Commerce Marketing Practices

Pure-click

Brick-and-click

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Channel Levels

A one level channel has one intermediary.

Example Automobile dealers, petrol

pumps.

A two level channel has two

intermediaries, example FMCGs and

consumer durables. HLL uses this strategy

A three level channel or more usually in

food distribution

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Identifying Channel AlternativesTypes of

intermediaries

Number of

intermediaries

Terms and

responsibilities

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Types of intermediaries Direct sales using sales force

Direct sales with own outlets

Direct mail

Telemarketing

Internet marketing

Agents, distributors, dealers, retailers

Franchisee

Self help groups, NGOs in rural sector

Eachmethodhas its own advantages and disadvantages

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Number of Intermediaries

Exclusive

Selective

Intensive

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Terms and responsibilities of distributors

Price policy

Conditions of sale

Distributors territorial rights

Mutual services and responsibilities

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What is Channel Conflict?

Channel conflict occurs when one

members actions prevent another channel

from achieving its goal.

Types of channel conflict

Vertical Dells direct selling creates conflict

with the retailers

Horizontal Conflict between two

franchisees of Pizza hut

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Causes of Channel Conflict

Goal incompatibility

Unclear roles and rights

Differences in perception

Intermediaries dependence

on the manufacturer

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Marketing Debate

Does it matter where you are sold?

Take a position:

1. Channel images do not really affectthe brand images of the products they

they sell that much.

or

2. Channel images must be consistent with

the brand image.

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Marketing Discussion

Think of your favorite retailers.

How have they integrated theirchannel system?

How would you like their channels to

be integrated? Do you use multiple channels from

them?Why?