15 Designing and Managing Integrated Marketing Channels 1

14-2 Chapter Questions What is a marketing channel system and value network? What work do marketing channels perform? How should channels be designed? What decisions do companies face in managing their channels? How should companies integrate channels and manage channel conflict? What is the future for e-commerce?

14-3 Marketing Channels Sets of interdependent organizations involved in the process of making a product or service available for use or consumption.

4 “Sourcing and logistics would remain ‘the darkest continent of business’ – the least exploited area of business for competitive advantage”

14-5 Marketing channels must not just serve markets, they must also make markets. The channels chosen affect all other marketing decisions.

14-6 Channels and Marketing Decisions Push Strategy Pull Strategy

14-7 Categories of Buyers (having different needs during the purchase process) Habitual shoppers High value deal seekers Variety-loving shoppers High-involvement shoppers

14-8 Hybrid Channels & Buyer Expectations for Channel Integration Ability to order a product online and pick it up at a convenient retail location Ability to return an online-ordered product to a nearby store Right to receive discounts based on total online and offline purchases

14-9 Value Networks Think about the target market, then design the supply chain (demand chain planning).

14-10 Should the 4 P’s be replaced? Solutions Information Value Access

14-11 Why Using Intermediaries? Many producers lack the financial resources to carry out direct marketing. Producers can earn a greater return by increasing investment in their main business. Direct marketing simply is not feasible.

14-12 Channel Member 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

14-13 Designing a Marketing Channel System Analyze customers’ desired service output levels Establish channel objectives Identify major channel alternatives Evaluate major channel alternatives

14-14 Channel Service Outputs Lot size Waiting/delivery time Spatial convenience Product variety Service backup

14-15 Identifying Channel Alternatives Types of intermediaries Number of intermediaries Terms and responsibilities

14-16 Number of Intermediaries Exclusive Selective Intensive

14-17 Channel-Management Decisions Selecting channel members Training channel members Motivating channel members Evaluating channel members Modifying channel members

14-18 Channel Power Coercive Reward Legitimate Expert Referent

14-19 Channel Integration and Systems  Vertical marketing systems Corporate VMS Administered VMS Contractual VMS  Horizontal marketing systems  Multichannel systems

14-20 Managing Channel Conflicts Adoption of superordinate goals Cooptation Diplomacy Mediation Arbitration

14-21 e-Commerce Marketing Practices Pure-click Brick-and-click Brick-and-mortar