designing marketing channels

DESIGNING AND MANAGING

INTEGRATED MARKETING CHANNELS

WHAT IS A MARKETING CHANNEL?

Marketing Channel

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

Push strategyuses the manufacturer’s sales force, trade promotion money, and other means to induce intermediaries to carry, promote, and sell the product to end users.

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

Pull strategy

Push & pull strategy

UNDERSTANDING CUSTOMER NEEDS

Categories of BuyersHabitual shoppers

High value deal seekers

Variety-loving shoppers

High involvement shoppers

Types of shoppersService/quality

customers

Price/value customers

Affinity customers

ROLE OF MARKETING CHANNELS

Channel Member FunctionsGather information


Develop and disseminate persuasive communications


Develop and disseminate persuasive communicationsReach agreements on price and terms



Acquire funds to finance inventories



Acquire funds to finance inventoriesAssume risks



Acquire funds to finance inventoriesAssume risks

Provide for storage

Channel Member FunctionsProvide for buyers’ payment of their bills

Channel Member FunctionsProvide for buyers’ payment of their bills

Oversee actual transfer of ownership

Marketing Channel Flows Example

Consumer Marketing Channels

Industrial Marketing Channels

CHANNEL DESIGN DECISIONS

Designing a Marketing Channel System

Analyze customer needs

Evaluate major channel alternatives

Identify major channel alternatives

Establish channel objectives



Lot size



Lot size

Waiting/delivery time



Lot size


Spatial convenien

ce



Lot size


Spatial convenien

ce

Product variety



Lot size


Spatial convenien

ce

Product variety

Service back up



Types of intermediari

es




es

Number of intermediari

es




es


es

Terms and responsibiliti

es



es



es

Exclusive



es

Exclusive

Selective



es

Exclusive

Selective

Intensive




es


es


es



es



es

Price policy

Conditions of sale

Distributor’s territorial rights

Mutual services and responsibilities

The Value-Adds vs. Costs of Different Channels

CHANNEL MANAGEMENT

DECISIONS

Channel-Management DecisionsSelecting channel members

Training channel members

Motivating channel members

Evaluating channel members

Modifying channel members

CHANNEL INTEGRATION AND

SYSTEMS

Channel Integration & SystemsVertical marketing systems

Horizontal marketing systems

Multichannel systems

Channel Integration & SystemsVertical marketing systems

Horizontal marketing systems

Multichannel systems

• Corporate VMS• Administered

VMS• Contractual VMS

■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 conflictGoal 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 Companies

those that have launched aWeb site without anyprevious existence as a firm

Brick-and-Click Companies

existing companies that have added an online site for information and/or e-commerce

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