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23/12/2014
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Designing and ManagingIntegrated
Marketing Channels
Marketing Management, 13th ed
15
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 15-2
Chapter Questions
• What is a marketing channel system andvalue network?
• What work do marketing channels perform?• How should channels be designed?• What decisions do companies face in
managing their channels?• How should companies integrate channels
and manage channel conflict?• What are the key issues with e-commerce?
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 15-3
Philips Emphasizes Value Delivery
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Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 15-4
What is a Marketing Channel?
A marketing channel system is theparticular set of interdependent
organizations involved in the process ofmaking a product or service available
for use or consumption.
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 15-5
Channels andMarketing Decisions
• A push strategy uses the manufacturer’ssales force, trade promotion money, andother means to induce intermediaries tocarry, promote, and sell the product to endusers.
• A pull strategy uses advertising, promotion,and other forms of communication topersuade consumers to demand the productfrom intermediaries.
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 15-6
Aldi Adjusted Its Strategyfor the U.S. Market
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Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 15-7
Buyer Expectations forChannel Integration
• Ability to order a productonline and pick it up at aconvenient retail location
• Ability to return an online-ordered product to anearby store
• Right to receive discountsbased on total online andoffline purchases
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 15-8
Categories of Buyers
Habitual shoppers
High value deal seekers
Variety-loving shoppers
High-involvement shoppers
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Types of Shoppers
• Service/quality customers• Price/value customers• Affinity customers
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Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 15-10
Channel Member Functions
• Gather information• Develop and disseminate persuasive
communications• Reach agreements on price and terms• Acquire funds to finance inventories• Assume risks• Provide for storage• Provide for buyers’ payment of their bills• Oversee actual transfer of ownership
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 15-11
Figure 15.2 Marketing Channel Flows
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Figure 15.3Consumer Marketing Channels
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Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 15-13
Figure 15.3Industrial Marketing Channels
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 15-14
Designing aMarketing Channel System
Analyze customer needs
Evaluate major channel alternatives
Identify major channel alternatives
Establish channel objectives
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 15-15
Channel Service Outputs
Lot size
Waiting/delivery time
Spatial convenience
Product variety
Service backup
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Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 15-16
Identifying Channel Alternatives
Types ofintermediaries
Number ofintermediaries
Terms andresponsibilities
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Number of Intermediaries
Exclusive
Selective
Intensive
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 15-18
Terms and Responsibilitiesof Channel Members
• Price policy• Condition of sale• Distributors’ territorial rights• Mutual services and responsibilities
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Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 15-19
Figure 15.4 The Value-Adds vs. Costsof Different Channels
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 15-20
Figure 15.5 Break-Even Chart for theChoice Between a Company Sales Force
and Manufacturer’s Sales Agency
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 15-21
Channel-Management Decisions
Selecting channel members
Training channel members
Motivating channel members
Evaluating channel members
Modifying channel members
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Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 15-22
Channel Power
• Coercive• Reward• Legitimate• Expert• Referent
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Channel Integration and Systems
Vertical marketingsystems
• Corporate VMS• Administered VMS• Contractual VMSHorizontal
marketing systemsMultichannel
systems
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 15-24
What is Channel Conflict?
• Channel conflict occurs when onemember’s actions prevent anotherchannel from achieving its goal.
• Types of channel conflict• Vertical• Horizontal• Multichannel
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Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 15-25
Causes of Channel Conflict
Goal incompatibility
Unclear roles and rights
Differences in perception
Intermediaries’ dependenceon the manufacturer
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 15-26
Table 15.3 Strategies for ManagingChannel Conflict
• Adoption ofsuperordinate goals
• Exchange ofemployees
• Joint membership intrade associations
• Cooptation• Diplomacy• Mediation• Arbitration• Legal recourse
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Coach Avoids Brand Dilution
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e-Commerce Marketing Practices
• Pure-click• Brick-and-click
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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 theythey sell that much.
or
2. Channel images must be consistent withthe brand image.
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 15-30
Marketing Discussion
Think of your favorite retailers. How have they integrated their
channel system? How would you like their channels to
be integrated? Do you use multiple channels from
them? Why?