1. A Framework for Marketing Management
Chapter 13
Designing and Managing Integrated Marketing Channels
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2. Copyright 2009, Prentice-Hall, Inc.
Chapter Questions
What are marketing channel systems and value networks?
What functions do marketing channels perform?
What decisions do companies face in designing, managing, and integrating their channels?
What key issues do companies face in e-commerce?
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3. Marketing Channels and Value Networks
Marketing channels—sets of interdependent organizations involved in the process of making a product or service available for use or consumption.
Value network—a system of partnerships and alliances that a firm creates to source, augment, and deliver its offerings.
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4. Push and Pull Strategies
Push strategy—uses the manufacturer’s sales force and trade promotion to induce intermediaries to carry, promote, and sell the products to end users.
Pull strategy—manufacturer uses advertising and promotion to persuade consumers to ask intermediaries for the product, thus inducing the intermediaries to order it.
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5. Role of Marketing Channels
Performs the work of moving products from producers to consumers, overcoming time, place, and possession gaps.
Forward flow functions
Backward flow functions
Both directions
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6. 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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Channel Levels
Zero-level channel
One-level channel
Two-level channel
Three-level channel
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8. Channel-Design Decisions
Analyze customers’ desired service output levels
Establish objectives and constraints
Identify major channel alternatives
Evaluate the major alternatives
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9. Analyzing Customers’ Desired Service Output Levels
Lot size
Waiting and delivery time
Spatial convenience
Product variety
Service backup
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10. Establishing Objectives and Constraints
State channel objectives in terms of targeted service output levels.
Objectives vary with product characteristics.
Environmental factors:
Competitors’ channels
Economic conditions
Legal regulations and restrictions
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11. Identifying Major Channel Alternatives
Types of intermediaries
Merchants
Facilitators
Number of intermediaries
Exclusive
Selective
Intensive
Terms and responsibilities of channel members
Price policy
Conditions of sale
Distributors’ territorial rights
Mutual services and responsibilities
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12. Evaluating the Major Alternatives
Determine whether own sales force or a sales agency will produce more sales.
Estimate the costs of selling different volumes through each channel.
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13. Channel-Management Decisions
Selecting channel members
Training and motivating channel members
Evaluating channel members
Modifying channel arrangements
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14. Channel Integration and Systems
Vertical marketing system
Horizontal marketing system
Multichannel marketing system
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15. Vertical Marketing System (VMS)
Producer, wholesaler(s), and retailer(s) acting as a unified system.
Types:
Corporate VMS
Administered VMS
Contractual VMS
Wholesaler-sponsored voluntary chains
Retailer cooperatives
Franchise organizations
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16. Horizontal Marketing Systems
Two or more unrelated companies put together resources or programs to exploit an emerging marketing opportunity.
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17. Integrated Multichannel Marketing Systems
Multichannel marketing—a single firm uses two or more marketing channels to reach one or more customer segments.
Integrated marketing channel system—the strategies and tactics of selling through one channel reflect the strategies and tactics of selling through other channels.
Benefits:
Increased market coverage
Lower channel costs
More customized selling
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18. Conflict, Cooperation, and Competition
Channel conflict—generated when one channel member’s actions prevent another channel member from achieving its goal.
Channel coordination—channel members are brought together to advance the goals of the channel.
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Types of Conflict
Vertical channel conflict—between different levels within the same channel.
Multichannel conflict—manufacturer has established two or more channels that sell to the same market.
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20. Causes of Channel Conflict
Goal incompatibility
Unclear roles and rights
Differences in perception
Dependence
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21. Strategies for Managing Channel Conflict
Adoption of superordinate goals
Exchange of employees
Joint membership in trade associations
Co-optation
Diplomacy, mediation, or arbitration
Legal recourse
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22. Legal and Ethical Issues in Channel Relations
Exclusive dealing
Exclusive territories
Tying agreements
Dealers’ rights
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23. E-Commerce Marketing Practices
E-business—use of electronic means and platforms to conduct a company’s business.
E-commerce—the company or site transacts or facilitates the online selling of products and services.
E-purchasing—companies buy goods, services, and information from online suppliers.
E-marketing—company efforts to inform buyers, communicate, promote, and sell its offerings online.
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Pure-Click Companies
Search engines
Internet service providers (ISPs)
Commerce sites
Transaction sites
Content sites
Enabler sites
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25. Internet Sources of Information
Supplier Web sites
Infomediaries
Market makers
Customer communities
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26. Brick-and-Click Companies
Strategies for gaining acceptance from intermediaries when selling through intermediaries and online:
Offer different brands or products on the Internet.
Offer offline partners higher commissions to cushion the negative impact on sales.
Take orders on the Web site but have retailers deliver and collect payment.
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M-Commerce
Mobile commerce
Using cellular phones or personal digital assistants to wirelessly connect to the Internet.
Success will be driven by:
Convenience
Ease of use
Trust
Widespread availability
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