Designing and Managing Value Networks and Channels
Transcript of Designing and Managing Value Networks and Channels
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Unit - V Designing and Managing
Value Networks and Channels
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What is a marketing channel system and value network?
What work do marketing channels perform? How should channels be designed? What decisions do companies face in
managing their channels? How should companies integrate channels
and manage channel conflict? What is the future for e-commerce?
Chapter Questions
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Sets of interdependent organizationsinvolved in the process of making a product or service available for use
or consumption.
Marketing Channels
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A very critical decision for the management as it involves a substantial cost
A long term commitment Converting potential buyers into profitable
orders Not only SERVE markets but MAKE markets
PUSH VS PULL Strategy
Importance of Channels
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Hybrid channels
Categories of buyers ◦ Habitual buyers◦ High value deal seekers◦ Variety loving shoppers◦ High involvement shoppers
Channel Development
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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
Buyer Expectations for Channel Integration
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A system of partnerships and alliances that a firm creates to source, augment and deliver its offerings
It includes suppliers, its suppliers supplier, immediate customers and also the end customers
Supply chain planning Demand chain planning
Value networks
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Channel functions and flows
Channel levels
Service sector channels
Role of marketing channels
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◦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◦Provide for buyers’ payment of their bills
◦Oversee actual transfer of ownership
Channel members functions
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Forward Flow Physical Title PromotionBackward Flow Payment Information
Channel Flows in marketing
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Zero Level channel One level channel Two level channel Three level channel
SERVICE SECTOR CHANNELS Education dissemination systems Health delivery system
Channel Levels
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Analyze customer needs Establish channel objectives Identify major channel alternatives Evaluate major channel alternatives
Designing a Marketing Channel System
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Channel service output Lot size Waiting/delivery time Spatial convenience Product variety Service backup
Analyzing customer’s desired service output level
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Should be stated in terms of targets output levels May vary with product characteristics Strengths and weaknesses of intermediaries
should be taken into consideration Competitors channels Legal regulations
Establishing objectives and constraints
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Types of intermediaries
Identifying Channel Alternatives
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Number of intermediaries◦ Exclusive◦ Selective◦ Intensive
Terms and responsibilities◦ Price policy◦ Conditions of sale◦ Distributers territorial rights◦ Mutual services & responsibilities
Identifying Channel Alternatives
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Economic criteria – Channel advantage◦ Will they sell◦ Cost of selling
Low cost alternatives – internet, telemarketing, retail stores
High or med cost -distributors, value added partners, direct sales
Control and adaptive criteria – ◦ Ex. sales agency –less control
Evaluating the major alternatives
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Selecting channel members Training channel members Motivating channel members
◦ Channel power –coercive, reward, legitimate , expert & referent
Evaluating channel members Modifying channel members
Channel-Management Decisions
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Vertical marketing systems Corporate VMS Administered VMS Contractual VMSHorizontal marketing systemsMultichannel systems
Channel Integration and Systems
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Types of conflict and competition◦ Vertical –diff level within the channel◦ Horizontal – between members of same level
within the channel◦ Multi channel - between two channels
Causes of conflict◦ Goal incompatibility◦ Unclear roles rights◦ Differences in perception◦ Dependence on manufacturer
Channel Conflict
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Adoption of super ordinate goals Cooptation Diplomacy Mediation Arbitration
Legal and ethical issues in channel relations
Managing Channel Conflict