marketing channel

Designing and Managing Integrated

Marketing Channels

Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 15-1


Chapter Questions

• What is a marketing channel system and value 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?


Raymond presents

world-class experience through its

stores


What is a Marketing Channel?

A marketing channel system is the particular set of interdependent

organizations involved in the process of making a product or service available

for use or consumption.


Channels and Marketing Decisions

• A push strategy uses the manufacturer’s sales force, trade promotion money, and other means to induce intermediaries to carry, promote, and sell the product to end users.

• A pull strategy uses advertising, promotion, and other forms of communication to persuade consumers to demand the product from intermediaries.


Categories of Buyers

Habitual shoppers

High value deal seekers

Variety-loving shoppers

High-involvement shoppers


Why Are Intermediaries used?

• Provide financial resources to take title up front

• Direct marketing may require producer to become middleman for complimentary products (Wrigley Ex.)

• More ROI from production, as overheads are high in distribution

• Reach / availability of products to customers• Reduces amount of work needed for

customer service.


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


Marketing Channel Flows


Consumer Marketing Channels


Designing a Marketing Channel System

Analyze customer needs

Evaluate major channel alternatives

Identify major channel alternatives

Establish channel objectives

Establish channel objectives

• Product Characteristics

• Middleman Characteristics

• Competitive Characteristics

• Company Characteristics

• Environmental Characteristics



Identifying Channel Alternatives

Types of

intermediaries

Number of

intermediaries

Terms and

responsibilities


Number of Intermediaries

Exclusive

Selective

Intensive


Terms and Responsibilities of Channel Members

• Price policy• Condition of sale• Distributors’ territorial rights• Mutual services and responsibilities


Channel Service Outputs

Lot size

Waiting/delivery time

Spatial convenience

Product variety

Service backup


The Value-Adds vs. Costs of Different Channels


Break-Even Chart for the Choice Between a Company Sales Force and

Manufacturer’s Sales Agency


Channel-Management Decisions

Selecting channel members

Training channel members

Motivating channel members

Evaluating channel members

Modifying channel members


Channel Power

• Coercive

• Reward

• Legitimate

• Expert

• Referent


Channel Integration and Systems

Vertical marketing systems

• Corporate VMS• Administered VMS• Contractual VMSHorizontal

marketing systemsMultichannel

systems


What is Channel Conflict?

• Channel conflict occurs when one member’s actions prevent another channel from achieving its goal.

• Types of channel conflict• Vertical• Horizontal• Multichannel


Causes of Channel Conflict

Goal incompatibility

Unclear roles and rights

Differences in perception

Intermediaries’ dependence

on the manufacturer


Strategies for Managing Channel Conflict

• Adoption of superordinate goals

• Exchange of employees

• Joint membership in trade associations

• Cooptation• Diplomacy• Mediation• Arbitration• Legal recourse


e-Commerce Marketing Practices

• Pure-click• Brick-and-click


Buyer Expectations for Channel 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 and offline purchases


Rural Distribution

Traditional Channels for Reaching Out to Rural Customers• Haats• Mandis• Melas

Innovative DistributionChannels for RuralMarkets• Hub and Spoke Model• Mobile shops and offices• Linkage with community

based organizations(SHGs, NGOs, andcooperatives


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?


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.

marketing channel

Documents

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channel integration

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marketing decisions

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