Designing and Managing

Integrated Marketing Channels

OVER THE PAST THREE DECADES, THE OVERWHELMING

EMPHASIS IN THE MARKETING MIX HAS BEEN ON:

PRODUCT STRATEGY WITH

PRICING STRATEGY

AND PROMOTIONAL STRATEGY

ALSO BEING STRESSED.

BUT.....

MARKETING CHANNEL STRATEGY (PLACE);

THE FOURTH “P” IN THE MARKETING MIX HAS

BEEN LARGELY NEGLECTED

BUT THIS IS CHANGING....

MARKETING CHANNEL STRATEGY IS

GROWING IN IMPORTANCE, WHY?

REASONS

Search for Sustainable Competitive Advantage

Growing Power of Retailers in Marketing

Channels

The Need to Reduce Distribution Costs

The Increased Role and Power of Technology

MARKETING CHANNELS

The Internal (Own Sales force) or External(all

kind of channel partners) organizations that

management operates to achieve its

distribution objectives (reaching the product

to the end user).

WHAT IF YOU WANT TO BUY A

TOOTHPASTE?

MAJOR ROLE OF AN INTERMEDIARY

Time

PossessionPlace

MARKETING CHANNEL LEVELS

Manufacturer

Retailer

End User

Manufacturer

End User

Manufacturer

Distributor

Retailer

End User

Zero Level One- Level Two- Level

MARKETING CHANNEL MEMBERS

Carrying & Forwarding Agents (C&FAs)

Distributors/Dealers

Wholesalers

Retailers

CARRYING &FORWARDING AGENTS

Collecting the product

Breaking the bulk & Dispatching it to the Distributor

Take physical possession of the good but don‟t pay for it

On contract of the company

Remit value of the goods sold to the company

DISTRIBUTORS

Invest in product by buying it form the company

Work on margins.

They may or may not get credit from the company but they

give credit to wholesalers or retailers

May be exclusive or shared with others

WHOLESALERS

Deal with bulks

They chose and decide what product they will sell

Customers are; other wholesalers, retailers and institutions

They negotiate about 15 days credit from the distributor and

special offer on giving purchase request more than once a

week

Cash & Carry

RETAILERS

French word - Retaillier – to Break Bulk

Shopkeepers set up shops at market place.

Acts as a salesman

Possesses more knowledge on customer needs and aspirations

Strength lies in „Availability‟ & „Visibility‟ of the products they sell

Extend credit to only 25% of their customers

Also provides home delivery

Helps in creating time, place and possession utility.

PATTERNS OF DISTRIBUTION

Intensive Distribution: Product is made available in as many

as outlets possible.

Selective Distribution: Few Select outlets would be permitted

to keep company‟s products.

Exclusive Distribution: only one outlet will have the product

also the outlets set up by the

companies for their own products.

PROMINENT CHANNEL SYSTEMS

Vertical Marketing System (VMS)

Horizontal Marketing System

Multi-channel Marketing System

Channel Management

Decisions

SELECTING CHANNEL PARTNERS

Through advertisements in the press

Getting sales people to visit the markets & speak to the

promising candidates.

References from existing channel partners

CARRYING & FORWARDING AGENTS

Location of the Warehouse

Past Experience

Financial Strength

Transportation Facility

Attitude, Commitment

DISTRIBUTORS

Own Sales force

Current Business

Market Coverage

Credit Extended in the market

Infrastructure Availability

Sales Performance

TRAINING CHANNEL PARTNERS

On the job field training to the channel sales people.

Classroom training to the distributor and his staff.

Special meetings on the launch of new products.

Training on submitting reports & maintaining records.

Care of Co. products in the custody of the channel members.

MOTIVATING CHANNEL PARTNERS

Referent Power

Expert Power

Legitimate Power

Reward Power

Coercive Power

EVALUATING CHANNEL MEMBERS

Sales quota attainment

Average inventory levels

Treatment of Damaged goods, and cooperation in

promotional and training programs.

Underperformers need to be counseled, retrained, motivated

or terminated

MODIFYING CHANNEL ARRANGEMENTS

& DESIGNS

Consumer buying patterns change,

The market expands,

Innovative distribution channels emerge and the product

moves into the later stages in the PLC.

CHANNEL CONFLICT

A situation of discord or disagreement between channel

members for the same marketing channel system.

REASONS FOR CHANNEL CONFLICT

Goal Incompatibility

Unclear Role definition

New Channel Partner

Target Fixing exercise

Extension of credit

TYPES OF CHANNEL CONFLICT

Vertical channel conflict– Conflict between two members at different levels within the same channel. A manufacturer having a conflict with a distributor is an example of vertical.

Horizontal channel Conflict– Involves conflict between members at the same level with in the channel.

Multichannel conflict– When the manufacturer has established two or more channels that sell to the same market.

SOME TERMS YOU SHOULD KNOW

E-Commerce – Use of electronic means & platforms to

conduct a company‟s business.

Pure-Click Companies

Brick-and-Click Companies

M-Commerce