mm lecture 6 am(channel management)

7/27/2019 MM Lecture 6 AM(Channel Management)

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Unit - IV

Marketing Channels: Channel

Management, Co-operation & ConflictManagement

Arun MishraAsst. Professor

VNS Business School

(M) 9893686820

Email: [email protected]


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Marketing Channels Defined

A Marketing Channel can be viewed as large canalor pipeline through which products, their ownership,

communication, financing and payment, and

accompanying risk flow to the consumer.

It is a set of interdependent organisations that eases

the transfer of ownership as products move from

producer to business users of consumers.

Channel Members are all parties in the marketingchannel who negotiate with one another, buy sell

products, & facilitate the change of ownership.


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Value Delivery Network

Value delivery network is the firms

suppliers, distributors, and ultimately

customers who partner with eachother to improve the performance of

the entire system


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The Nature and Importance of MarketingChannels

Intermediaries offer producers greater

efficiency in making goods available to

target markets. Through their contacts,experience, specialization, and scale of

operations, intermediaries usually offer

the firm more than it can achieve on itsown.

How Channel Members Add Value


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The Nature and Importance ofMarketing Channels

From an economic view, intermediaries

transform the assortment of products into

assortments wanted by consumers

Channel members add value by bridging

the major time, place, and possession

gaps that separate goods and servicesfrom those who would use them



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The Nature and Importance of

Marketing Channels



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The Nature and Importance of

Marketing Channels


Information Promotion Contact

Matching NegotiationPhysical

distribution

Financing Risk taking


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Number of Channel Levels


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Channel Conflict

Channel conflict refers to disagreement overgoals, roles, and rewards by channel members.

Types of Conflicts:

Horizontal conflict involves conflict between

members at the same level within the channel. Eg.A

Pizza franchisee complain about the other franchisee

cheating.

Vertical conflict means conflicts between different

levels within the same channel.

Multi Channel Conflict exist when the manufacturer

has established two or more channels that sell to the

same market.


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Channel Conflict

Causes of Channel conflict: Goal incompatibility.

Unclear roles and rights.

Differences in perception.

Intermediaries dependence on the manufacturer.

Managing Channel Conflicts:

Adoption of superordinate goals

Exchange persons between two or more channel levels.

Including them in advisory councils etc.

Encouraging joint memberships in trade associations.

Diplomacy

Mediation

Arbitration


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Vertical Marketing Systems

Vertical marketing systems (VMSs)

consist of producers, wholesalers, and

retailers acting as a unified system and

consist of:

Corporate Vertical Marketing systems

Contractual Vertical Marketing systems

Administered Vertical Marketing systems


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Corporate vertical marketing system integrates

successive stages of production and distribution under

single ownership .

Administered vertical marketing system has a few

dominant channel members without common ownership.Leadership comes from size and power.

Contractual vertical marketing system consists of

independent firms at different levels of production and

distribution who join together through contracts to obtainmore economies or sales impact than each could achieve

alone. The most common form is the franchise

organization.



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Franchise organization links several stages in

the production distribution process

Manufacturer-sponsored retailer franchise system

Manufacturer-sponsored wholesaler franchise

system

Service firm-sponsored retailer franchise system


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Horizontal Marketing System

Horizontal marketing systems are when two

or more companies at one level join together to

follow a new marketing opportunity. Companies

combine financial, production, or marketingresources to accomplish more than any one

company could alone.

Eg. Many supermarket chains have

arrangement with local banks to offer in-store banking .


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Multichannel Distribution SystemsHybrid Marketing Channels

Multichannel Distribution systems

(Hybrid marketing channels) are

when a single firm sets up two or more

marketing channels to reach one or

more customer segments


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Channel Behavior and

OrganizationMultichannel Distribution System


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Channel Management Decisions

Selectingchannel

members

Managingchannel

members

Motivatingchannel

members

Evaluatingchannel

members


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mm lecture 6 am(channel management)

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