Marketing Channels: Delivering Customer Value

Session Outline Supply Chains and the Value Delivery Network The Nature and Importance of Marketing Channels Channel Behaviour and Organization Channel Design Decisions Channel Management Decisions

Supply Chains and the Value Delivery Network The network made up of the company, suppliers, distributors and ultimately customers who “partner” with each other to improve the performance of the entire system in delivering customer value.

The Nature and Importance of Marketing Channels Marketing Channel (Distribution Channel) A set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user.

How Channel Members Add Value Number of Contacts without a Distributor Manufacturer 1 Customer 3 Customer 2 Customer 1 Manufacturer 2 Manufacturer 3

Number of Contacts with a Distributor Manufacturer 1 Customer 3 Customer 2 Customer 1 Manufacturer 2 Manufacturer 3 Distributor

Key Functions Performed by Members of the Marketing Channel Information Promotion Contact Matching Negotiation Physical Distribution Financing Risk Taking

Number of Channel Levels A layer of intermediaries that performs some work in brining the product and its ownership closer to the final buyer. Direct Marketing Channel A marketing channel that has no intermediary levels. Indirect Marketing Channel Channel containing one or more intermediary levels.

Customer Marketing Channels 0-Level 1-Level 2-Level 3-Level Manufacturer Manufacturer Manufacturer Manufacturer Wholesaler Wholesaler Jobber Retailer Retailer Retailer Consumer Consumer Consumer Consumer

Industrial Marketing Channels 0-Level 1-Level 2-Level 3-Level Manufacturer Manufacturer Manufacturer Manufacturer Manufacturer’s Representative Manufacturer’s Representative Industrial Distributor Industrial Customer Industrial Customer Industrial Customer Industrial Customer

Channel Design Decisions Analyzing Consumer Needs Setting Channel Objectives Identifying Major Alternatives Evaluating the Major Alternatives

Analyzing Consumer Needs Designing the marketing channel starts with finding out what target consumers want from the channel. From where do customers willing to buy? Buy in person, by phone or online? Breadth of assortment? Add-on services?

Setting Channel Objectives Companies should state their marketing channel objectives in terms of targeted levels of customer service. Company can identify several segments wanting different levels of service. The company should decide which segments to serve and the best channels to use in each case.

Identifying Major Alternatives Types of Intermediaries Number of Intermediaries Intensive Distribution Exclusive Distribution Selective Distribution Responsibilities of Channel Members

Evaluating the Major Alternatives Each alternative should be evaluated against, Economic Criteria Control Criteria Adaptive Criteria

Channel Management Decisions Selecting Channel Members Managing and Motivating Channel Members Evaluating Channel Members

Summary and Conclusions