Marketing Channels

Contents

Marketing Channels – An Intro1

Channel Design2

Channel Evaluation3

Channel Management4

Marketing Channels

They are set of interdependent organizations involved

in all the marketing activities and process of making a

product or service available for use or consumption.

Intermediaries

Merchants: Intermediaries who buy, take title to and resell the

merchandise.

Agents : Brokers, manufacturers representatives, sales agents who

search for customers & negotiate for producers.

Facilitators: Who assist in the distribution process .

Ex : Warehouses, ad agencies , logistic

companies etc.

( Distribution function only)

Importance – Marketing channels

a) Creation of markets

b) Creation of potential buyers

c) Involved in the distribution of products and services.

Push and Pull strategy

Push strategy:

Involves use of manufacturers sales force, trade promotion and other means to induce intermediaries to promote the product .Used when there is low brand loyalty in the category

Pull strategy:

In this advertisement, promotion and other forms of communication is used to persuade the consumers. Its used when there is high brand loyalty & involvement.

Multi channel Marketing

Hybrid or Multichannel marketing – when firm uses two

or more marketing channels to reach the customer segments.

Channel integration is expected by customers.

Value networks

It’s a system of partnerships and alliances that a firm creates to

source, augment and deliver its offerings. Suppliers, immediate

customers and end customers are part of it .

Demand chain planning

Company first think of the Target market and then design the

supply chain backward from that point.

Channel 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

Channel levels

• Zero level \ Direct marketing channel .

• Two level and Three level marketing channels

Consumer & Industrial marketing channels

Service channels

Service industries utilizing Internet, mobile and other technologies .

Designing a Marketing Channel System

Analyze customer needs

Evaluate major channel alternatives

Identify major channel alternatives

Establish channel objectives

Channel Service Outputs

• Lot size: Number of units the channel permits a typical customer

to purchase on one occasion

• Waiting/delivery time: Average time customers of that channel

wait for receipt of the goods

• Spatial convenience: degree to which the marketing channel

makes it easy for customers to purchase the product

• Product variety: assortment breadth provided by the marketing

channel

• Service backup—add-on services (credit, delivery, installation,

repairs) provided by the channel

Identifying Channel Alternatives

Types of intermediaries

Number of intermediaries

Terms and responsibilities

Strategies adopted based on no of intermediaries include

I. Exclusive distribution : Limited number of intermediaries.

II. Selective distribution : Relies on only some of the

intermediaries for a particular product.

III. Intensive distribution : large number of intermediaries involved.

Terms and responsibilities of intermediaries

• Price policy—price list and schedule of discounts and allowances

for the intermediaries

• Condition of sale —payment terms and producer guarantees

• Distributors’ territorial rights—distributors’ territories and the

terms under with the producer will enfranchise other distributors

• Mutual services and responsibilities

Evaluation criteria of Channel alternatives

a) Economic

b) Control

c) Adaptive

The Value-Adds Versus Costs of Different Channels

Channel Management decisions

Selecting channel members

Training channel members

Motivating channel members

Evaluating channel members

Modifying channel members

Training and motivating channel members

Training , MR and other capacity building programmes to

motivate and improve intermediaries performance

Channel Power

• Ability to alter channel behavior so they function in a desired

• way which they would not have . Different types of channel power

• Coercive--threat

• Reward—extra benefit

• Legitimate--contract

• Expert--knowledge

• Referent—proud to be associated