marketing channels

Think Efficiency and Effectiveness

Add a Distributor

Marketing Channel Defined

A set of interdependent organizations involved in the process of making a product or service available for use or consumption.

III. Intermediaries

A. Types Retailer Wholesaler Agent

B. Value Created by Intermediaries Improve exchange efficiency Perform marketing functions Eliminate assortment / quantity discrepancies

Types of Intermediaries

How intermediaries improve exchange efficiencies

Channel Structure Decisions

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Examples of direct and indirect channels

Gatekeeper Important asset of marketing strategy

Differentiator Difficult to replicate

End-user satisfaction Overall brand image

Awareness of channel importance is low Opportunity for competitive advantage

Difficult to create and maintain channel Difficult and costly to change Right the first time

Importance of Studying Marketing Channels

Channel Members

Manufacturers Intermediaries

Retailers Wholesalers

End-users

Channel Analysis Framework

CHANNEL DESIGNSegmentation

Channel StructureSplitting the WorkloadDegree of Commitment

Gap Analysis

CHANNEL IMPLEMENTATION

Channel Power Channel Conflict

Manage/Defuse Conflict

Channel Coordination

Segmentation

Splitting market into groups of end-user

Segmentation

Example: Segments of book end-users Recreational readers University students

• Convenience-oriented• Price-oriented

Selecting Target Segments

Those we can serve most profitably Restrictions

Managerial bounds Environmental bounds

• Legal Competitive benchmarks

Channel Structure

1. Types of channel members

2. Identities of specific channel members

3. Channel intensity: number of each type

Gap Analysis The difference between

optimal and actual channels

Demand side gaps Service output demands are

not being met Undersupplied Oversupplied

Supply side gaps At least one flow is costing

too much Lack of expertise Waste

Channel Power

Ability to control other channel members Necessary to implement channel design May be used to optimize channel to

benefit of all channel members

Channel Conflict

Actions of channel members prevent channel from achieving its goals

Goal conflict Domain conflict Perceptual conflict

Manage/Diffuse Conflict

Identify sources of conflict Poor channel design Poor performance

Take action Exercise channel power

Channel Coordination

Result of Channel designed to meet service output

demands of target end-user segments

Ongoing process

Insights for Specific Channel Institutions

Retailers Wholesalers Logistics firms Supply chain issues Franchises