1. Designing and Managing Integrated Marketing Channels
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2. Marketing Channels
Marketing channels are the formal sets of interdependent organizations participating in the process of making a product or service available for use or consumptions.
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3. Functions of a Channel
To bridge the gap between the producer of a product and the user of it.
A channel performs three important functions. Not all channel members perform the same function.
Transactional functions: buying, selling, and risk assumption
Logistical functions: assembly, storage, sorting, and transportation
Facilitating functions: post-purchase service and maintenance, financing, information dissemination, and channel coordination or leadership
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4. Intermediaries Merchants Agents Facilitators MBAmaterials
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5. The Importance of Channels
Channel is an important element of marketing mix- closely interrelated like pricing, promotion and product,.
It enables to cut down the cost and maximize the revenue
It determines when and where product will be available to ultimate consumer or users
Ultimate Selling Price
30% - 50%
Channel Members
5% - 7%
Advertising
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6. Managing Intermediaries
A push strategy uses the manufacturer’s sales force, trade promotion money, and other means to induce intermediaries to carry, promote, and sell the product to end users. A pull strategy uses advertising, promotion, and other forms of communication to persuade consumers to demand the product from intermediaries.
Push strategy
Pull strategy
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7. Multichannel Marketing (Hybrid)
Internet
Sales Force
Telemarketing
Direct Mail
Retailer
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8. Multichannel Marketing (Hybrid)
HP has used its
Sales Force: to sell to large accounts
Telemarketing : to sell medium sized accounts
Direct mail : to sell small accounts
Retailer: to sell to still smaller accounts, and
Internet : to sell specialty items
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9. Channel Integration
Customer expects channel integration, which allows them to:
Order a product online and pick it up at a convenient location
Return an online-ordered product to a nearby store of the retailer
Receive discounts and promotional offers based on total online and offline purchase
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10. Value Networks
Value networks is a system of partnership and alliance that the firm creates to source, augment, and deliver its offerings.
It Includes:
Supplier
Supplier’s Supplier
Immediate Customer
End customers
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11. The Role of Marketing Channels
Marketing channels goes very effective when one have contacts, experience, specialization, and scale of operation, intermediaries makes good widely available and accessible to target markets.
The most important roles of a marketing channel, is to provide a the producer with a clear set of actions, that transforms various resources into a finished end-product, available and optimized for consumption.
Marketing channels help manufacturers deliver their goods when and where its needed. It also makes goods and services available to the customer in a convenient way.
It is easier to work through the extensive network.
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12. The Role of Marketing Channels
Merchants
Contacts
Experience
Specialization
Scale of operation
Agents
Facilitators
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13. The Role of Marketing Channels cont…
Channel Functions and Flows
A marketing channel performs the work of moving goods from producers to consumers.
It overcome the time, place, and possession gaps that separates goods and services from those who need or want them.
Some functions constitute a forward flow of activity from the company to the customer; other functions constitute a backward flow from customer to the company.
A manufacturer selling a physical product and services might require three channels: a sales channel, a delivery channel, and a service channel.
 ::: The Role of Marketing Channels
Channel Functions and Flowsa marketing channel performs the work of moving goods from producers to consumers.Some functions constitute a forward flow of activity from the company to the customer;other functions constitute a backward flow from customer to the company. Amanufacturer selling a physical product and services might require three channels: a saleschannel, and a service channel.
Channel levels
a zero level channel consist of a manufacturer selling directly to the final customer.Major examples are door to door sale, mail order.A one-level channel contains one selling intermediary; a two-level channel contains twoselling intermediaries. These intermediates could be retailers, distributors.As the no. of levels increase the level of difficulty of information sharing andcoordination also increase. Channels normally describe a forward movement of productsfrom source to user.
Service Sector Channels
marketing channels are not limited to the distribution of physical goods. Producer of service and ideas also face problem of making their output available and accessible totarget population
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14. Channel Functions and Flows
Time
Place
Possession
Transportation, communication
Ordering, payment
Forward Flow
Backward Flow
Information, negotiation, finance, risk taking
Members of the marketing channel perform a number of key functions. Some of these functions (storage and movement, title, and communications) constitute a forward flow of activity from the company to the customer; other functions (ordering and payment) constitute a backward flow from customers to the company. Still others (information, negotiation, finance, and risk taking) occur in both directions.
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15. Marketing Flows
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16. Commonalities Among All Channel Functions
They use up scarce resources
They can often be performed better through specialization
They can be shifted among channel members
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17. 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
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18. Channel levels Zero-level (Direct marketing) channel
A zero level channel consist of a manufacturer selling directly to the final customer. Major examples are door to door sale, mail order, Internet selling etc.
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19. One level Channel
One-level channel contains one selling intermediary, such as retailer..
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20. Two level Channel
A two-level channel contains two selling intermediaries. These intermediates could be retailers, distributors .
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21. Three level Channel It contains three intermediaries. MBAmaterials
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22. Consumer and Industrial Marketing Channels
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23. Service Sector Channels
As internet and other technologies advance, service industries such as banking, insurance, travel, and stock buying and selling are operating through new channels.
marketing channels are not limited to the distribution of physical goods. Producer of service and ideas also face problem of making their output available and accessible to target population.
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24. Analyzing customer need and want
Customers may choose the channels for different products based on price, products assortment, convenience and other factors like economic social or experiential.
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25. Fives service outputs produced by channels
Lot size
Waiting and delivery time
Spatial Convenience
Product Variety
Service backup (credit, delivery, installation, repair)
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26. Establishing objectives and constraints
Marketers should set their channel objectives on the basis of service output levels, associated cost and support levels.
On the basis of these channel is set.
Channel objective vary with product characteristics.
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27. Marketers must adapt their channel objectives to larger environment.
Channels are also affected by legal regulations and restrictions.
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28. Identifying major channel alternatives
Channels may vary from sales force to agents, dealers, direct mail, telemarketing. They have advantages and disadvantages.
Sales force are expensive, through dealers company wont have direct contact, internet mat not be effective.
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29. Channel alternatives differ in three ways: Types of intermediaries
Number of Channel members
Terms and responsibilities of Channel members
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30. Types of intermediaries
It may vary from direct sales force, mail-order catalog, mass merchandiser, company stores, dealers, agents etc.
It depends on:
cost
Difficulty in operation
Desired level of service
time
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31. Number of intermediaries
Three strategies based on number of intermediaries are
Exclusive distribution
Selective distribution
Intensive distribution
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32. Exclusive distribution Number of outlets are very low
Done when producer want to maintain control over service level and output.
They want more knowledgeable selling
Creates high loyalty and considerable sales support.
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33. Selective distribution
It is a strategy in which the producers try to have right number of intermediaries on the basis of market potential, density of population, dispersion of sales, and competitors distribution policy.
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34. Intensive distribution
Marketers place goods and services in many outlets as possible
Marketers move from exclusive of selective to intensive to increase coverage and sales.
Low price, low margin and small order size may result.
Retailers may compete aggressively.
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35. Terms and Responsibilities of Channel Members
The producers and intermediaries must agree on the terms and responsibilities of each channel member. They should agree on price policies, conditions of sale, territorial rights, and specific services to be performed by each party.

36. Terms and Responsibilities of Channel Members
There are mainly four elements involved:
1. Price policy:
The producers should establish a list price and a fair set of discounts and allowances for intermediaries.
2. Conditions of Sale:
It refers to payment terms and producer guarantees. Most producers grant cash discounts to distributors for early payments. They might also offer a guarantee against defective merchandise or price declines, creating an incentive to buy larger quantities.
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37. Terms and Responsibilities of Channel Members
3. Distributor’s territorial rights: It consists of the terms under which the producer will enfranchise other distributors. Distributors normally expect to receive full credit for all sales in their territory, whether or not they did the selling. Also, the producers must be careful about where it places its new resellers. Example: Sipradi Energy 4. Mutual services and responsibilities: It must be carefully spelled out, especially in franchised and exclusive-agency channels. For example: McDonald and its franchisee.
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38. Evaluating the Major Alternatives
Economic criteria:
Using economic criteria, a company compares the likely sales, costs and profitability of different channel alternatives. What will be the investment required by each channel alternative, and what returns will result?
Control criteria:
The company must also consider control issues. Using intermediaries usually meant giving them some control over the marketing of the product, and some intermediaries take more control than others. Other things being equal, the company prefers to keep as much control as possible.
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39. Evaluating the Major Alternatives
Adaptive criteria:
Finally the company must apply adaptive criteria. Channels often involve long term commitments, yet the company wants to keep the channel flexible so that it can adapt to environmental changes.
Thus, to be considered, a channel involving long term commitments should be greatly superior on economic and control grounds.
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