Marketing Channels Chapter 1 Marketing Channels Structure and Functions.
The Environment of Marketing Channels. Marketing Channel and the Environment Marketing channels...
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Transcript of The Environment of Marketing Channels. Marketing Channel and the Environment Marketing channels...
Marketing Channel and the Environment
• Marketing channels develop and operate in a complex environment that is continually changing.
• Channel managers must therefore have an understanding of the environment and how it can influence channel management in order to plan effective marketing channel strategies for meeting these changes successfully.
Major Environment
• Economic environment• Competitive environment• Sociocultural environment• Technological environment• Legal environment
Impact of Environment in a Marketing Channel Context
Environment:1.Economic2.Sociocultural3.Competitive4.Legal5.Technological
Producers and manufacturers
Intermediaries
Target markets
Facilitating agencies
Locus of channel management
Channel manager’s analysis of environmental impact must include all channel participants
Member participants
Nonmember participants
1. Economic Environment
• The most obvious and pervasive category of variables affecting all members and participants in the channel.
1. Economic Environment
Major economic phenomena:• Recession: 2 consecutive quarters of decline
in the Gross Domestic Product (GDP), any period in which the GDP is stagnant or increasing very slowly is often referred to as ‘recessionary” or at least and “economic slowdown.”
1. Economic Environment
Major economic phenomena:• Inflation: Inflation is the rate of increase in prices
for goods and services. When the price level rises, each unit of currency buys fewer goods and services.
• There are a number of different measures of inflation in use. The most frequently quoted and most significant ones are the Consumer Prices Index (CPI) and the Retail Prices Index (RPI).
www.bbc.com/news/business-12196322
1. Economic Environment
Major economic phenomena:• Deflation: When the overall price level
decreases so that inflation rate becomes negative, it is called deflation. It is the opposite of the often-encountered inflation.
http://economictimes.indiatimes.com/definition/deflation
1. Economic Environment
Major economic phenomena:• Other economic issues: – Trade deficit– National debt/ budget deficit– High interest rate
2. Competitive Environment
Types of competition:1.Horizontal competition2.Intertype competition3.Vertical competition4.Channel system competition
1) H1) Horizontal (Intratype) orizontal (Intratype) CompetitionCompetition
• Competition between firms of the same type.
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2) I2) Intertype Competitionntertype Competition
• Competition between different types of firms at the same channel level.
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3) V3) Vertical Competitionertical Competition
• Competition between channel members at different levels in the channel.
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4) C4) Channel System hannel System CompetitionCompetition
• Complete channels competing with other complete channels.
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3. Sociocultural Environment
• Age patterns of population• Changing ethnic mix• Educational trends• Family or household structure• Changing role of women
3. Sociocultural Environment
Population Age Patterns
Ethnic Mix
Educational Trends
Family or Household Structure
U.S. pop. Becoming both younger & older # of minority-owned businesses Levels = people more demanding Smaller & more varied
Role of Women # = changing shopping needs
4. Technological Environment
Help retailers & wholesalers closely monitor success orfailure of products they handle
ScannersComputerized inventory management
& Portable computers
4. Technological Environment
• Electronic data interchange
EDI – ElectronicData
Interchange
• Links together channel information systems• Provides real-time responses• Enhanced by Internet
= Enhanced Distribution
Efficiency
5. Legal Environment
The set of laws that impact marketing channels
• Continually evolving • Affected by changing values, norms, politics,
& precedents• Knowledge of basics helps channel manager
avoid serious & costly legal problems
5. Legal Environment
• Legal issues in channel management
• Dual Distribution, or multi-channel distributionProducer or manufacturer uses 2 or more different channel structures
for distributing the same product• Exclusive Dealing
Supplier requires its channel members to sell only its products or to refrain from selling directly to competitive suppliers
•Full-Line ForcingSupplier requires channel members to carry a full-line of its products in
order to sell any particular products in supplier’s line
5. Legal Environment
• Legal issues in channel management
• Price DiscriminationSupplier sells at different prices to the same class of channel
members• Price Maintenance
Supplier dictates prices charged by channel members to their customers
• Refusal to DealSupplier has right to refuse to deal with whomever they want as
channel members
5. Legal Environment
• Legal issues in channel management
• Resale RestrictionsManufacturer attempts to stipulate to whom and in what geographical market channel
members may resell the manufacturer’s products
• Tying AgreementsSupplier sells a product to a channel member on condition that the channel member also
purchase another product
• Vertical IntegrationFirm owns and operates organizations at other levels of the distribution channel