Deigning & Managing Integrated Marketing Channels

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1. 1- 1 Deigning & Managing Integrated Marketing Channels

2. Marketing Channels Sets of interdependent organizations involved in the process of making a product or service available for the use and consumption Merchants: Wholesalers, retailers, Agents: Brokers, manufacturers’ representative, sales agents Facilitators: Transportation companies, independent warehouses, banks, advertising agencies

3. Marketing Channel System The particular set of marketing channels a firm employs, and decisions about it are among the most critical ones management faces Push strategy: Use the manufacturer’s sales force, trade promotion money, and other means to induce intermediaries to carry, promote, and sell the product to end users Pull strategy: Use advertising, promotion, and other forms of communication to persuade consumers to demand the product from intermediaries

4. Hybrid Channels Multiplying the no. of channels Dell, HP: Sales force sells to large accounts, outbound telemarketing sells to medium-sized accounts, direct mail sells to small accounts, retailers sell to still smaller accounts, and the Internet to sell specialty items Customers‘ expectation on channel integration characteristics: 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

5. Understanding Customer Needs Customers choose the channels based on their preference: Price, product assortments, convenience, own shopping goals (economic, social, experiential) Categories of Buyers Habitual shoppers: Buying from the same place High value deal seekers: Seeking the lower price Variety-loving shoppers: Evaluating the values added by channels and buying from the best one whatever price High-involvement shoppers: Looking for good price and a good supports

6. Understanding Customer Needs Types of Shoppers Service/quality customers: Seeking variety & performance of products & services provided Price/value customers: Spending money wisely Affinity customers: Seeking stores which is suited to them or their aspirational group

7. Value Networks A system of partnerships & alliances that a firm creates to source, augment, & deliver its offering To deliver superior value to target market Consists of suppliers, suppliers’ suppliers, immediate customers & end users

8. The Role of Marketing Channels Channel Member Functions Gather information Develop and disseminate persuasive communications Reach agreements on price and terms Place orders with manufacturers Acquire funds to finance inventories Assume risks Provide for storage & movement of physical goods Provide for buyers’ payment of their bills Oversee actual transfer of ownership

9. Marketing Channel Flows

10. Consumer Marketing Channels

11. Industrial Marketing Channels

12. Levels of Marketing Channels Zero-level channel: Direct-marketing One-level channel Two-level channel Three-level channel Reverse-flow channel: To refill, refurbish for resale, recycle, or dispose Service Sector Channels: Educational-dissemination systems, health-delivery systems

13. Channel-Design Decisions Four steps in designing channel system Analyzing customer needs Lot size, waiting time, spatial convenience. product variety, service backup Establishing channel objectives Influenced by the nature of company, products, marketing intermediaries, competitors & environment Identifying major channel alternatives Types of intermediaries, no. of intermediaries ( Exclusive, selective, intensive), terms & responsibilities Evaluating major channel alternatives Economic criteria, control & adaptive criteria

14. Channel Integration & Systems Conventional marketing channel Comprise an independent producer, wholesaler(s), & retailer(s) Separate businesses seeking to maximize its own profits Vertical marketing systems Comprise of producer, wholesaler(s), & retailer(s) acting as a unified system Result of strong channel members’ attempt to control channel behavior & eliminate channel conflict resulting of pursuing own goals

15. Channel Integration & Systems Vertical marketing systems Corporate VMS: Manufacturer owned distributor Combine successive stages of production & distribution under single ownership Administered VMS: Who has more power Coordinates successive stages of production & distribution through the size & power of one of the members Contractual VMS: Independent firms at different level of production & distribution working together in contractual basis to obtain more economies & sales impact

16. Channel Integration & Systems Horizontal marketing systems Two or more unrelated companies put together resources & programs to exploit an emerging marketing opportunity Due to lack of capital, know-how, production or marketing resources, to venture alone or afraid of the risks Temporary or permanent basic Multichannel marketing When a single firm uses two or more marketing channels to reach one pr more customer segments Integrating multichannel marketing systems The strategies & tactics of selling through one channel reflect the strategies & tactics of selling through other channels

17. Conflict, Cooperation & Competition Channel conflict occurs when one member’s actions prevent another channel from achieving its goal Types of channel conflict Vertical: Conflict between different levels within the same channel (E.g. wholesaler & retailer) Horizontal: Conflict between members at the levels within the channel (E.g. between retailers) Multichannel: Exist when the manufacturer has established two or more channels that sell to the same market (E.g. through both retailers & dealers) Especially intense when the members of one channel get lower price or work with a lower margin

18. Causes of Channel Conflict Goal incompatibility: Market penetration vs. short-run profitability Unclear roles and rights: Approaching an account by both manufacturers & dealers, territory boundaries Differences in perception: Optimistic vs. pessimistic Intermediaries’ dependence on manufacturer

19. Strategies for Managing Channel Conflict Adoption of superordinate goals Exchange of employees Joint membership in trade association Cooptation Diplomacy, mediation, arbitration Legal recourse

20. E-Commerce Marketing Practices E-business: The use of electronic means & platforms to conduct a company’s business E-commerce: The company or site offers to transact or facilitate the selling of products & services online E-purchasing: Companies decide to purchase goods, services, & information from various online suppliers E-marketing: Company efforts to inform buyers, communicate, promote, & sell its products & services over the Internet

21. E-Commerce Marketing Practices Pure click companies: Search engines, ISPs, commercial sites, transaction sites, content sites, & enabler sites (E.g. Amazon.com) Only 1.9% of visitors lead to sales compare to 5% in department stores Inhibitors of online shopping: Absence of pleasurable experiences, social interaction, personal; consultation with a rep., Brick-&-click companies: Adding an online e-commerce channel to existing distribution channel To resolve the channel confilts Offering different brand or products Offer off-line partners higher commission Take orders on the Web site but deliver & collect payment through retailers

22. M-Commerce Business transactions through mobile devices (cell phone & PDA) while on the move Developing faster in Europe and Japan than in U.S Delivery of highly relevant information, custom-tailored to the user’s current location and activity Type of service: Information-based service Transaction-based service Personalized service (location-based application)

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