Session 2 Marketing channel strategy.pptx

Session 2 Marketing channel strategy.pptx

1. Marketing Channel Strategy and Management

2. 2 The Channel Selection Decision Fundamental Questions Who are potential customers ? Where do they buy ? When do they buy ? How do they buy ? What do they buy ?

3. 3 Marketing Channel Alternatives Producer Ultimate Buyers Brokers or Agents Distributors or Wholesalers Retailers or Dealers

4. 4 Direct versus Indirect Distribution Direct - using firm’s own distribution, usually used when: intermediaries are not available or are not capable of satisfying target market needs target markets are easily identifiable personal selling is an important communication tool for the company the company has a wide variety of offerings for the target market organizational resources are available

5. 5 Indirect - using intermediaries type, location, density and number of channels must be determined can sometimes perform distribution activities more efficiently and less expensively Direct versus Indirect Distribution

6. 6 Electronic Marketing Channels ...use the Internet to make goods and services available to consumers Disintermediation -- elimination of traditional intermediaries and direct distribution through electronic marketing channels

7. 7 Ultimate Buyers Amazon.com Book Publisher Book Wholesaler Amazon.com (Virtual Retailer) Dell Computer Dell.com Representative Electronic Marketing Channels Airline Travelocity (Virtual Agent) Travelocity.com

8. 8 Channel Selection at the Retail Level Type and place decisions depend on the buying requirements of the target market and the potential profitability of the outlets Number of intermediaries carrying the firm’s offering in a geographic area or density also needs to be determined

9. 9 Exclusive Intensive Selective Extent of Distribution Coverage Wrigley’s Coke Levi’s Sony Lexus Rolex

10. 10 Dual Distribution occurs when an organization distributes its offering through 2 or more different marketing channels that may or may not compete for similar buyers the main consideration is whether it will provide incremental sales revenue or cannibalize existing sales

11. 11 Intermediary Requirements Intermediaries are concerned with the adequacy of the offering require marketing support seek a degree of exclusivity expect a profit margin consistent with the functions they are expected to perform

12. 12 Trade Relations Channel Conflict Sources of Channel Conflict : when one channel member bypasses another over how profit margins are distributed when manufacturers believe that retailers or wholesalers are not giving their products enough attention dual distribution

13. 13 Channel-Modification Decisions Reasons: shifts in geographical concentration of buyers inability of existing intermediaries to meet the needs of buyers costs of distribution

14. 14 Factors in Modification Decisions Will the change improve the effective coverage of the sought target markets? Will the change improve customer satisfaction? Which marketing functions must be absorbed? Does the organization have the resources to perform the new functions? What will be the effect on other channel members? What will be the effect on long-term organizational objectives?

15. Case studies Starbucks: https://www.youtube.com/watch?v=80N8cBp2LvU Coca Cola https://www.youtube.com/watch?v=TmWgQPsbQ30 15

16. Marketing Channel Strategy 5 Objective 1: The broad principles by which the firm expects to achieve its distribution objectives for its target market(s) This definition, though parallel to Kotler’s definition of marketing strategy Thus, marketing channel strategy is concerned with the place aspect of marketing strategy To achieve their distribution objectives, six basic distribution decisions: C hannel S trategy:

17. 5 Distribution Decisions Objective 2: The role of distribution in the firm’s overall objectives & strategies The role distribution should play in the marketing mix The design of the firm’s marketing channels The selection of channel members The management of the marketing channel in order to implement the firm’s channel design effectively & efficiently on a continuing basis The evaluation of channel member performance

18. 5 Channel Strategy as Overall Corporate Objective Objective 3: The higher the priority given to distribution, the higher the level at which it should be considered in formulating the organization’s overall objectives and strategies Consider, For example , BMW, the internationally prestigious maker of high-performance luxury cars. BMW wants to revolutionize the way its automobiles are distributed in the United States. Rather than manufacturing automobiles ahead of time and placing them in dealer inventories,

19. 5 Determining the Priority Given to Distribution Peter Drucker , had this to say about the importance of distribution: Changes in distributive channels may not matter much to GNP and macroeconomics. But they should be a major concern to every business and industry Everyone knows how fast technology is changing. Everyone knows about markets becoming global and about shifts in the work force and in demographics. But few people pay attention to changing distribution channels Apple CEO Steve Jobs made a strategic distribution decision include the establishment of its own “bricks and mortar” retail stores. If we fail to manage the distribution of our products and services properly, our revenue, gross margin and profitability could suffer.

20. 5 Channel Strategy & the Marketing Mix To fulfill the criteria of marketing mix we are not able to neglect the role of distribution The job of the marketing manager is to develop the right combination of the four Ps to provide and maintain the desired level of target market satisfactions ( Ts ). To do so, the marketing manger has to consider the possible contributions of each variable in meeting the demands of the target market. Objective 4:

21. Distribution Relevance to Target Market Demand 1. Distribution is the most relevant variable for satisfying target market demands. 2. Parity exists among competitors in the other three variables of the marketing mix. 3. A high degree of vulnerability exists because of competitors’ neglect of distribution. 4. Distribution can enhance the firm by creating synergy from marketing channels .

22. 5 Objective 5: Emphasis on Distribution Strategy Distribution is the most relevant variable for satisfying target market demands. Parity exists among competitors in the other three variables of the marketing mix. A high degree of vulnerability exists because of competitors’ neglect of distribution. Distribution can enhance the firm by creating synergy from marketing channels. IF: THEN: or or or The firm should choose distribution strategy for strategic emphasis

23. Target Market Demand 5 Firms should stress distribution when it serves customers’ needs in the target market. Marketing channels are so closely linked to customer need satisfaction because it is through distribution that firms can provide the kinds and levels of service that make for satisfied customers.

24. 5 Competitive Parity Distribution advantages are not easily copied by competitors. Distribution advantages are based on a combination of superior strategy, organization, and human capabilities.

25. 5 Distribution Neglect Competitors’ neglect of distribution strategies provides excellent opportunities. The channel manager must analyze target markets to determine whether competitors have neglected distribution and whether vulnerabilities exist that can be exploited.

26. Distribution and Synergy 5 “Hooking up” with a mix of cooperative channel members will strengthen the channel. Because each channel member is an independent entity, rewarding opportunities exist for channel managers to cultivate cooperation among members.

27. 5 Differential Advantage & Channel Design Objective 6: Differential advantage, also called sustainable competitive advantage, occurs when a firm attains a long-term, advantageous position in the market relative to competitors. • Caterpillar https://thebrandhopper.com/2024/02/24/marketing-strategy-and-marketing-mix-of-caterpillar/#:~:text=4.,in%20the%20industrial%20equipment%20industry

28. 5 Positioning the Channel A firm that plans the channel and makes decisions by viewing the relationship with channel members as a partnership or strategic alliance that offers recognizable benefits to the manufacturer & channel members on a long-term basis • Infiniti

29. 5 Selection of Channel Members Objective 7: Reflect channel strategies the firm has developed to achieve its distribution objectives Be consistent with the firm’s broader marketing objectives & strategies Reflect the objectives & strategies of the organization as a whole Because customers perceive channel members as an extension of the manufacturer’s own organization, members should:

30. Channel Strategy & Managing the Channel 5 Objective 8: 3 Strategic Questions How close a relationship should be developed with the channel members? How should the channel members be motivated to cooperate in achieving the manufacturer’s distribution objectives? How should the marketing mix be used to enhance channel member cooperation?

31. Closeness of Channel Relationships 5 Distribution intensity Targeted markets Products Company policies Middlemen Environment Behavioral dimensions Factors to consider

32. Marketing Mix in Channel Management 5 Marketing Mix Product strategy Pricing strategy Promotion strategy Distribution strategy

33. Motivation of Channel Members 5 Objective 9: Portfolio concept: A tool for motivating different types and sizes of channel members participating in various channel structures who may respond differently to various motivation strategies.

34. 5 Evaluation of Channel Member Performance Objective 10: Have provisions been made in the design and management of the channel to assure that channel member performance will be evaluated effectively? Channel manager’s involvement in evaluating member performance is integral to developing & managing channel

35. Microsoft Surface https://www.themarketingpractice.com/en-gb/work/microsoft 35