chapter 15 electronic marketing channels part 4: additional perspectives on marketing channels
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CHAPTER 15Electronic Marketing Channels
Part 4: Additional Perspectives on Marketing Channels
Objective Structure of Electronic
Marketing Channels
ThreeKey
Phenomena
1. Disintermediation versusreintermediation
2. Information flow versus product flow
3. Virtual channel structure versus physical channel structure
2
Objective Disintermediation and
Reintermediation3
Disintermediation
Intermediaries are unnecessary because
producers gain exposure to vast
numbers of customers
Example: Dell
Reintermediation
Shifting, changing, or adding middlemen to
the channel
Example: Amazon.com
Disintermediation versusReintermediation
No matter how technologically sophisticated the Internet becomes or how much it is hyped, the laws of economics as they relate to channel structure do not change.
Efficiency in the performance of distribution tasks is what ultimately determines what form channel structure will take.
The Internet has not eliminated middlemen, or caused total disintermediation.
Objective Internet Limitations
• Cannot be digitized
• Processed slowly, often by people
• Is basis for all other flows—negotiation, ownership, information, & promotion
4
Product Flow
Trends of Online Shopping
Year Online as % of
Retail Sales
% Change from Previous
Year
2002 1.3 19.7
2010 8.0 0.0
2011 9.0 12.5
2012 10.0 11.1
2013 10.0 0.0
Online Sales as a Percentage of Total Retail Sales
Objective Advantages & Disadvantages6
Advantages
1. Global scope & reach
2. Convenience/rapid transaction processing
3. Information processing efficiency & flexibility
4. Data-based management & relationship capabilities
5. Lower sales & distribution costs
1. Lack of contact with products/delayedpossession
2. Fulfillment cannot meet Internet speed or efficiency
3. Clutter, confusion, & cumbersome
4. Non-purchase motives are not addressed
5. Security concerns
Disadvantages
Office Depot has almost 1,000 office superstores and a giant catalog of office supplies that it offers via mail order. Yet Office Depot also enables its customers to shop on the Internet. Its Web site offers virtually all of the products Office Depot carries in its stores and catalog and guarantees next-day delivery to most locations in the United States with no delivery charge on orders over $50. Online order tracking is available, and customized ordering, which takes into account the historical patterns of an individual customer’s product purchases, is also a feature of Office Depot’s Internet-based channel.
What do you see as the advantages of Office Depot’s multichannel strategy? Are there any disadvantages?
Discussion Question #3
E-Commerce Implications:Objectives & Strategies of the Firm
Role of product distribution is more complex because of electronic marketing channels
Therefore
The channel manager must consider whether
Internet-based channels fundamentally affect
the firm’s distribution decisions
The Internet arms customers with more information about products & services
leveling the playing field
Distribution may assume a larger role relative to the other three P’s
E-Commerce Implications:The Marketing Mix
E-Commerce Implications:Channel Design
For an effective multichannel marketing strategy the channel manager should
provide “channel-surfing” consumers with whatever channels or combinations
of channels they desire or risk losing their business.
E-Commerce Implications:Channel Member Selection
Member selection complexity grows as decisions may include the need to avoid
conflict with conventional channel members and different channel partners.
E-Commerce Implications:Channel Management
The fundamental issues of motivating
channel members, building cooperation,
managing conflict, & coordinating
elements of the marketing mix in a
multichannel system requires a
manager’s full attention.
E-Commerce Implications:Evaluation
Unlikely to change
Performance
expectations,
criteria, and
measurement of
how well they are being
met by channel
members
Likely to change
Specific criteria for
performing
evaluations and the
technological means
for doing so
One of the potentially powerful advantages of m-commerce is the ability of sellers to target offers to consumers when they are in close proximity to the seller. This is made possible based on smartphone technology that tracks the exact geographical locations of their users. For example, if a consumer is near a Staples Office Superstore, a text message can be automatically sent to the consumer’s smartphone about a special offer on, say, print cartridges and paper. The technology that has made such m-commerce based proximity marketing possible was developed by startups such as ShopKick, Where, and Loopt, as well as by giants such as AT&T’s ShopAlerts. Although available to anyone with a smartphone, the proximity alerts will only be sent to consumers who have signed up for the program.
Do you think this type of m-commerce is an important channel option for consumers and sellers? Why or why not?
Discussion Question #5
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