1. McGraw-Hill/Irwin Copyright © 2009 by the McGraw-Hill Companies, Inc. All rights reserved.

2. Chapter 9 Business Marketing Channels: Partnerships for Customer Service

3. KEY OBJECTIVES OF MARKETING CHANNELS DELIVER THE NEEDED GOOD/SERVICE PLACE THE GOOD/SERVICE WHERE IT IS WANTED HAVE THE GOOD/SERVICE WHEN IT IS WANTED 9-3

4. MARKETING CHANNEL DIFFICULTIES CHANNELS ARE EXPENSIVE TO ESTABLISH CHANNELS ARE COSTLY TO COORDINATE CHANNELS ARE SLOW TO ADAPT TO ENVIRONMENTAL CHANGES 9-4

5. WHAT DISTRIBUTORS DO CONTRIBUTION TO MANUFACTURERS MARKET COVERAGE SALES CONTACTS INVENTORY AVAILABILITY ORDER PROCESSING MARKET INTELLIGENCE CUSTOMER SUPPORT CONTRIBUTION TO CUSTOMERS PRODUCT AVAILABILITY PRODUCT ASSORTMENT FITTING ORDER QUANTITY CREDIT SERVICE TECHNICAL SUPPORT 9-5

6. A MODEL FOR CHANNEL DESIGN Identify and forecast user service needs Identify and forecast user service needs Evaluate current channels and other options Evaluate current channels and other options Create a vision of the ideal channel Create a vision of the ideal channel Implement the best option and manage the system Implement the best option and manage the system Gap Analysis Gap Analysis Exhibit 9-5 9-6

7. SOURCES OF CONFLICT IN MARKETING CHANNELS GOAL CONFLICT: SALES GROWTH VS. PROFITS MEANS CONFLICT: HOW THINGS GET DONE AND WHO DOES WHAT & WHEN IS IT DONE CONFLICTING VIEWPOINTS: OUR VIEWPOINT VS. YOUR VIEWPOINT 9-7

8. HOW CHANNEL MEMBERS CAN RESPOND TO CONFLICT EXIT—Can leave the relationship VOICE—Can find a means to articulate dissatisfaction LOYALTY—Can continue to persevere in face of conflict AGGRESSION—Can openly or covertly take actions to injure the conflict party NEGLECT—Can leave the conflict untreated and fade away 9-8

9. OPTIONS FOR RESOLVING CONFLICT 1.PRIVATE REFEREES—Panel of channel members serve as a forum 2.THIRD PARTY SOLUTIONS—Mediated resolution 3.EMPATHIC MECHANISMS Use of a specialist Join Partner’s Industry Association Exchange personnel 9-9

10. SOURCES OF CHANNEL POWER 1.REWARD POWER — Ability to provide days off for specific outcome/behavior 2.COERCIVE POWER — Ability to punish for failure to perform 3.INFORMATION POWER — Ability to obtain information others do not have 4.EXPERT POWER — Ability to gain an advantage by what you know 5.REFERENT POWER — Ability to influence by serving as the model of best practices 6.LEGITIMATE POWER — Explicit authority granted by tradition or contract 9-10

11. RELATIONSHIP FORMS IN CHANNELS TRANSACTIONAL CHANNELS - Members trade at arms length ADMINISTERED CHANNELS - Interactions without formal chain of command or a set of rules CONTRACTUAL CHANNELS – Tightly coordinated by formal procedures and pledges of on-going exchange CORPORATE CHANNELS – High degree of vertical integration in the sales and distribution functions 9-11