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Definition of Marketing Channel
A Marketing Channel is.
consists of individuals and firmsinvolved in the process of making a
product or service available for use or
consumption by consumers orindustrial users
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Definition
Value Delivery Network
The network made up of thecompany, suppliers, distributors,and ultimately customers who
partner with each other toimprove the performance of theentire system.
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Channel choices affect
other decisions in themarketing mix
A strong distributionsystem can be a
competitive advantageChannel decisions involvelong-term commitments toother firms
Nature & Importance of
Marketing Channels
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How Channel Members
Add Value
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How Channel Members
Add Value Intermediaries
Require fewer contacts tomove the product to thefinal purchaser.
Help match productassortment demandwith supply.
Help bridge major time,place, and possession gaps
Nature & Importance of
Marketing Channels
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Nature & Importance of
Marketing ChannelsKey Functions Performed
by Channel Members
Information
PromotionContact
Matching
Negotiation
PhysicalDistribution
Financing
Risk taking
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Marketing Channels
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Number of Channel Levels The number of intermediary levels
indicates the length of a marketingchannel.
Direct Channels
Indirect Channels
Producers lose more control and facegreater channel complexity as
additional channel levels are added.
Nature & Importance of
Marketing Channels
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Nature & Importance of
Marketing ChannelsChannel Members Are Connected
Via A Variety of FlowsPhysicalFlow
PaymentFlow
InformationFlow
PromotionFlow
Flow of Ownership
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Channel Conflict Occurs when channel members
disagree on roles, activities, orrewards.
Types of Conflict:Horizontal conflict:occurs among
firms at the same channel level
Vertical conflict: occurs among firms
at different channel levels
Channel Behavior and
Organization
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Conventional Versus Vertical
Marketing System
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Vertical Marketing Systems
Corporate VMS
Contractual VMS
Manufacturer-sponsoredretailer franchise system
Manufacturer-sponsoredwholesaler franchise system
Service-firm-sponsoredretailer franchise system
Administered VMS
Channel Behavior and
Organization
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HorizontalMarketing Systems
Two or morecompanies at one
level join together tofollow a newmarketingopportunity.
Channel Behavior and
Organization
Nestle and General Mills work together to
market cereal outside of North America
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Multichannel Distribution
System
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Multichannel
Distribution Systems
Also called hybridmarketing channels
Occurs when a firm usestwo or more marketingchannels
Hybrid marketing hasmany advantages
Channel Behavior and
Organization
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Changing Channel Organization
Disintermediation has hurt manyestablished companies
Channel Behavior and
Organization
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Disintermediation:
Traditional brick andmortar travel agenciesface competition fromonline travel agencies,airlines, and reverse
auction web sites suchas Priceline.
Channel Behavior and
Organization
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Step 1:Analyzing
Consumer Needs Cost and feasibility
of meeting needs
must be considered
Channel Design Decisions
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Step 2:
Setting Channel Objectives Set channel objectives in terms of
targeted level of customer service
Many factors influence channelobjectives
Channel Design Decisions
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Step 3:
Identifying Major Alternatives
Channel Design Decisions
Types ofIntermediaries
Company sales
force Manufacturers
agency
Industrialdistributors
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Step 3:
Identifying Major Alternatives Number of marketing intermediaries
Intensive distribution
Selective distribution
Exclusive distribution
Responsibilities of channel members
Channel Design Decisions
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Step 4:Evaluating
Major Alternatives Economic criteria
Sales, costs,profitability
Control issues
Adaptive criteria
Channel Design Decisions
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Designing InternationalDistribution Channels
Global marketers usuallyadapt their channel strategiesto structures that exist withinforeign countries
Key challenges:
Channels may be complexor hard to penetrate
Channels may bescattered, inefficient, ortotally lacking
Channel Design Decisions
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Selecting Channel
Members Identify characteristics that
distinguish the best channelmembers
Managing and MotivatingChannel Members
Partner relationshipmanagement (PRM) is key
Channel Management
Decisions
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Evaluating Channel
Members Performance
should be checkedagainst standards
Channel members
should be rewardedor replaced asdictated byperformance
Channel Management
Decisions
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Exclusive distribution
Only certain outlets areallowed to carry a firms
products
Exclusive dealing
Exclusive territorialagreements
Tying agreements
Public Policy and
Distribution Decisions
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Marketing Logistics
Outbound distribution
Inbound distribution
Reverse distribution Involves the entire supply chain
management system
Marketing Logistics and
Supply Chain Management
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Supply Chain
Management
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Why Greater Emphasis is Being Placed
on Logistics: Offers firms a competitive advantage
Can yield cost savings
Greater product variety requires improvedlogistics
Improvements in distribution efficiency arepossible due to information technology
Marketing Logistics and
Supply Chain Management
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Goals of the Logistics System
No system can both maximizecustomer service and minimizecosts.
Firms must first weigh the
benefits of higher serviceagainst the costs.
State goals in terms of a targetedlevel of customer service at the least cost.
Marketing Logistics and
Supply Chain Management
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Major Logistics Functions
Warehousing
Inventory Management
Transportation
Logistics Information Management
Marketing Logistics and
Supply Chain Management
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Integrated Logistics
Management Cross-functional
teamwork inside thecompany is critical
Logisticspartnerships are alsobuilt through sharedprojects
Marketing Logistics and
Supply Chain Management
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