1. Electronic Marketing Channels
Part 4: Additional Perspectives on Marketing Channels
Electronic Marketing Channels

2. Structure of Electronic Marketing Channels2
Disintermediation versus
reintermediation
Information flow versus
product flow
Virtual channel structure versus
physical channel structure
Three
Key
Phenomena

3. Disintermediation and Reintermediation3
Disintermediation
Reintermediation
Intermediaries are unnecessary because producers gain exposure to vast numbers of customers
Shifting, changing, or adding middlemen to the channel
Example: Dell
Example: Amazon.com

4. Disintermediation versus Reintermediation
No matter how technologically sophisticated the Internet becomes or how much it is hyped, the laws of economics as they relate to channel structure do not change.
Efficiency in the performance of distribution tasks is what ultimately determines what form channel structure will take.
The Internet has not eliminated middlemen,
or caused total disintermediation.

5. Internet Limitations 4 Product Flow Cannot be digitized
Processed slowly, often by people
Is basis for all other flows—negotiation,
ownership, information, & promotion

6. Trends of Online Shopping
Online Sales as a Percentage of Total Retail Sales
Year
Online as % of
Retail Sales
% Change from Previous Year
2002
1.3
19.7
2010
8.0
0.0
2011
9.0
12.5
2012
10.0
11.1
2013

7. Advantages & Disadvantages6
Advantages
Disadvantages
Global scope & reach
Convenience/rapid transaction processing
Information processing efficiency & flexibility
Data-based management & relationship capabilities
Lower sales & distribution costs
Lack of contact with products/delayed
possession
2. Fulfillment cannot meet Internet speed or efficiency
Clutter, confusion, & cumbersome
Non-purchase motives are not addressed
Security concerns

8. Discussion Question #3
Office Depot has almost 1,000 office superstores and a giant catalog of office supplies that it offers via mail order. Yet Office Depot also enables its customers to shop on the Internet. Its Web site offers virtually all of the products Office Depot carries in its stores and catalog and guarantees next-day delivery to most locations in the United States with no delivery charge on orders over $50. Online order tracking is available, and customized ordering, which takes into account the historical patterns of an individual customer’s product purchases, is also a feature of Office Depot’s Internet-based channel.
What do you see as the advantages of Office Depot’s multichannel strategy? Are there any disadvantages?

9. E-Commerce Implications: Objectives & Strategies of the Firm
Role of product distribution is more complex because of electronic marketing channels
Therefore
The channel manager must consider whether
Internet-based channels fundamentally affect
the firm’s distribution decisions

10. E-Commerce Implications: The Marketing Mix
The Internet arms customers with more information about products & services leveling the playing field
Distribution may assume a larger role relative to the other three P’s

11. E-Commerce Implications: Channel Design
For an effective multichannel marketing strategy the channel manager should provide “channel-surfing” consumers with whatever channels or combinations of channels they desire or risk losing their business.

12. E-Commerce Implications: Channel Member Selection
Member selection complexity grows as decisions may include the need to avoid conflict with conventional channel members and different channel partners.

13. E-Commerce Implications: Channel Management
The fundamental issues of motivating channel members, building cooperation, managing conflict, & coordinating elements of the marketing mix in a multichannel system requires a manager’s full attention.

14. E-Commerce Implications: Evaluation
Unlikely to change
Performance expectations,
criteria, and measurement of
how well they are being met by channel members
Likely to change
Specific criteria for performing evaluations and the technological means for doing so

15. Discussion Question #5
One of the potentially powerful advantages of m-commerce is the ability of sellers to target offers to consumers when they are in close proximity to the seller. This is made possible based on smartphone technology that tracks the exact geographical locations of their users. For example, if a consumer is near a Staples Office Superstore, a text message can be automatically sent to the consumer’s smartphone about a special offer on, say, print cartridges and paper. The technology that has made such m-commerce based proximity marketing possible was developed by startups such as ShopKick, Where, and Loopt, as well as by giants such as AT&T’s ShopAlerts. Although available to anyone with a smartphone, the proximity alerts will only be sent to consumers who have signed up for the program.
Do you think this type of m-commerce is an important channel option for consumers and sellers? Why or why not?