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Designing and ManagingIntegrated

Marketing Channels

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Concepts-Issues

What is a marketing channel system andvalue 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 channelsand manage channel conflict?

What are the key issues with e-commerce?

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What is a Marketing Channel?

A marketing channel system is theparticular set of interdependent

organizations involved in the process ofmaking a product or service available

for use or consumption.

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Channels andMarketing Decisions

A push strategy uses the manufacturerssales force, trade promotion money, andother means to induce intermediaries tocarry, promote, and sell the product to endusers

A pull strategy uses advertising, promotion,and other forms of communication topersuade consumers to demand the productfrom intermediaries

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Buyer Expectations forChannel Integration

Ability to order a product online and pick it upat 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

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Categories of Buyers Habitual shoppers

High value deal seekers Variety-loving shoppers High-involvement shoppersTypes of Shoppers Service/quality customers Price/value customers Affinity customers

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Channel Member Functions

Gather information Develop and disseminate persuasive

communications

Reach agreements on price and terms Acquire funds to finance inventories Assume risks

Provide for storage Provide for buyers payment of their bills Oversee actual transfer of ownership

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Channel Service Outputs

Lot size Waiting/delivery time

Spatial convenience Product variety Service backup

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Designing a Marketing Channel System

Analyze customer needs Establish channel objectives Identify major channel alternativesa)Types of intermediariesb)Number of intermediaries

b1. Exclusive/Selective/Intensivec)Terms and responsibilities

c1. Price policy,Condition of sale,Distributors territorial rights,Mutual services and responsibilities

Evaluate major channel alternatives

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Channel-Management Decisions

Selecting channel members Training channel members Motivating channel members Evaluating channel members Modifying channel members

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Channel Power

Coercive Reward Legitimate Expert Referent

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Channel Integration and Systems

Vertical marketing systems Corporate VMS

Administered VMS Contractual VMS

Horizontal marketing systems

Multichannel systems

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What is Channel Conflict?

Channel conflict occurs when onemembers actions prevent anotherchannel from achieving its goal.

Types of channel conflict Vertical Horizontal Multichannel

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Causes of Channel Conflict

Goal incompatibility Unclear roles and rights

Differences in perception Intermediaries dependence on

manufacturer

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Strategies for Managing ChannelConflict

Adoption ofsuperordinate goals

Exchange of

employees Joint membership in

trade associations

Cooptation Diplomacy Mediation Arbitration Legal recourse