channel management
DESCRIPTION
Selecting and Managing Marketing Channels. What are the reasons to establish a Marketing Channel. What are the types and causes of Channel Conflict and how it can be resolved.TRANSCRIPT
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Selecting andManaging Marketing Channels
Anas Iftikhar
2815
Strategic Marketing Management
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1. What is meant by a marketing channel?
A: A marketing channel consists of individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users.
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• Marketing Channels for Consumer Goods and Services
Direct Channel
Indirect Channels
CHANNEL STRUCTURE AND ORGANIZATION
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FIGURE: Common marketing channels for consumer goods and services
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• Marketing Channels for Business Goods and Services
Industrial Distributor
Agent
CHANNEL STRUCTURE AND ORGANIZATION
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FIGURE 13-4 Common marketing channels for business goods and services
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CHANNEL CHOICE AND MANAGEMENT
• Factors in Choosing a Marketing Channel
Provide the Best Target Market Coverage
Best Satisfy the Target Market’sBuying Requirements
Be the Most Profitable
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CHANNEL CHOICE AND MANAGEMENT
Target Market Coverage
• Intensive Distribution
• Exclusive Distribution
• Selective Distribution
• Factors in Choosing a Marketing Channel
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Intensity of Market Coverage
• Intensive Distribution– Using all available outlets to distribute a product.
• Convenience products with high replacement rates
– Provides availability and reduces search time
– Availability is more important than outlet type
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Intensity of Market Coverage (cont’d)
• Selective Distribution– Using only some available outlets to distribute a
product• Shopping products and durable
goods with low replacement rates
– High qualification requirements for intermediaries to distribute, sell, service, and support products
Toyota’s Only
Authorized Dealer
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Intensity of Market Coverage (cont’d)
• Exclusive Distribution– Using a single outlet in a fairly large geographic
area to distribute a product• Expensive, high-quality products purchased
infrequently
– Exclusive outlets provide an incentive to sellers in limited markets
– Dealers carry complete inventory and have trained staff for sales and service
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CHANNEL CHOICE AND MANAGEMENT
Satisfying Buyer Requirements
• Lot Size
• Convenience
• Variety
• Services Backup
Reduction in number of contacts
• Factors in Choosing a Marketing Channel
• Waiting time
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How a Distributor Reduces theNumber of Channel Transactions
= Customer= Manufacturer
A. Number of contacts without a distributor
M x C = 3 X 3 = 9
1
32
456
789
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How a Distributor Reduces theNumber of Channel Transactions
= Distributor= Customer= Manufacturer
B. Number of contacts with a distributorM x C = 3 + 3 = 6
Store
1
2
3
4
5
6
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Conventional Distribution Channel vs. Vertical Marketing Systems
Verticalmarketingchannel
Manufacturer
Retailer
Conventionalmarketingchannel
Consumer
Manufacturer
Consumer
Retailer
Wholesaler
Wh
ole
sale
r
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Channel Conflict
• What types of conflict arise in channels?
• What causes channel conflict?
• What can be done to resolve conflict situations?
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What is Channel Conflict?
• In channel distribution, conflict is not negative, rather, some conflict actually strengthen and improves a channel.
• “Channel conflict arises when the behavior of a channel member is in opposition, to its channel counterpart. It is opponent centered and direct, in which the goal or object sought is controlled by the counterpart.”
Coughlan, Anderson,
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Types of Channel Conflict• Vertical Channel Conflict - conflict between different
levels within the same channel.
• Horizontal channel conflict - involves conflict between members at the same level within the channel.
• Multichannel conflict - exists when the manufacturer has established two or more channels that sell to the same market.
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Horizontal and Vertical Conflict in Marketing Channels
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Causes of Channel Conflict
• Goal Incompatibility
• Unclear Roles And Rights
• Differences In Perception
• Intermediaries’ Great Dependence
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Managing Channel Conflict
• Adoption of superordinate goals• Exchange persons between channel levels• Cooptation• Diplomacy, mediation, arbitration for chronic
or acute conflict