Conventional Marketing ChannelConventional marketing channel have been loose connections of independent

companies, each showing little concern for overall channel performance. They

have lacked strong leadership and have been troubled by damaging conflict and

poor performance. A conventional marketing channel consists of one or more

independent producers, wholesalers and retailers. Each is a separated business

seeking to maximise its own profits, even at the expense of profits for the

network as a whole. No channel members has much control over the other

members, and no formal means exist for assigning roles and resolving channel

conflict.

Vertical marketing network VMN

A distribution channel structure in which producers, wholesalers and retailers

act as a unified network - either one channel member owns the others, has

contracts with them, or wield so much power that they all cooperate.

Marketing Channels - Presentation Transcript

1. Chapter 16 Selecting and Managing Marketing Channels Marketing

Management Tenth Edition Philip Kotler

2. Objectives

o Work Performed by Marketing Channels

o Channel-Design Decisions

o Channel-Management Decisions

o Channel Dynamics

3. How a Distributor Reduces the Number of Channel Transactions =

Customer = Manufacturer A. Number of contacts without a distributor M

x C = 3 X 3 = 9 1 3 2 4 5 6 7 8 9

4. How a Distributor Reduces the Number of Channel Transactions =

Distributor = Customer = Manufacturer B. Number of contacts with a

distributor M x C = 3 + 3 = 6 Store 1 2 3 4 5 6

5. Distribution Channel Functions Ordering Payments Communication

Transfer Negotiation Financing Risk Taking Physical Distribution

Information

6. Consumer Consumer Marketing Channels Wholesaler Jobber

Retailer Consumer Manufacturer 0-level channel Wholesaler

RetailerRetailer Consumer Mfg 2-level channel Mfg 3-level channel

1-level channel Consumer Manufacturer

7. Industrial Marketing Channels Industrial distributors Manufacturer

Consumer Manufacturer’s representative Manufacturer’s sales branch

8. Customers’ Desired Service Levels

o Lot size

o Waiting time

o Spatial convenience

o Product variety

o Service backup

9. Break-Even Cost Chart Selling costs (dollars) Level of sales (dollars)

Company sales force Manufacturer’s sales agency S B

10.Channel Management Decisions Selecting FEEDBACK Motivating

Training Evaluating

11.Types of Vertical Marketing Systems Corporate Common Ownership at

Different Levels of the Channel Contractual Contractual Agreement

Among Channel Members Administered Leadership is Assumed by One

or a Few Dominant Members

12.Conventional Distribution Channel vs. Vertical Marketing Systems

Vertical marketing channel Manufacturer Retailer Conventional

marketing channel Manufacturer Wholesaler Consumer Consumer

Retailer Wholesaler

13.Causes of Channel Conflict

o Incompatibility

o Difference in Perception

o Dependence

14.Legal & Ethical Issues in Channel Relations

o Exclusive Dealing

o Exclusive Territories

o Tying Agreements

o Dealers’ Rights

15.Review

o Work Performed by Marketing Channels

o Channel-Design Decisions

o Channel-Management Decisions

o Channel Dynamics

E-Marketing

Email marketing is a form of direct marketing which uses electronic mail as a

means of communicating commercial or fund-raising messages to an audience.

In its broadest sense, every email sent to a potential or current customer could

be considered email marketing. However, the term is usually used to refer to:

sending email messages with the purpose of enhancing the relationship of

a merchant with its current or previous customers, to encourage customer

loyalty and repeat business,

sending email messages with the purpose of acquiring new customers or

convincing current customers to purchase something immediately,

adding advertisements to email messages sent by other companies to their

customers, and

sending email messages over the Internet, as email did and does exist

outside the Internet (e.g., network email and FIDO).

Researchers estimate that United States firms alone spent US $400 million on

email marketing in 2006.[

There are both advantages and disadvantages to using email marketing in

comparison to traditional advertising mail.

E-Purchasing

The implications for e-purchasing

Online auctions and exchanges have played an important role in the growth of

e-purchasing within businesses of all sizes and types.

E-procurement

There are two parts to the e-purchasing cycle - the more established of which is

e-procurement. This has been developed in recent years to deal with the process

element of electronic purchasing.

E-procurement is the use of the internet to operate the transactional aspects of

requisitioning, authorising, ordering, receipting and payment processes for the

required products or services.

A number of e-marketplaces offer transaction services that automate many

aspects of the procurement cycle for both the buyer and the seller.

E-procurement covers the following areas of the buying process:

requisition against order

authorisation

order

receipt

payment

Focus groupA focus group is a form of qualitative research in which a group of people are

asked about their perceptions, opinions, beliefs and attitudes towards a

product, service, concept, advertisement, idea, or packaging.[1] Questions are

asked in an interactive group setting where participants are free to talk with

other group members. The first focus groups were created at the Bureau of

Applied Social Research in the USA, by associate director, sociologist Robert K.

Merton.[2] The term itself was coined by psychologist and marketing expert

Ernest

In marketing

I

n the world of marketing, focus groups are seen as an important tool for

acquiring feedback regarding new products, as well as various topics. In

particular, focus groups allow companies wishing to develop, package, name, or

test market a new product, to discuss, view, and/or test the new product before it

is made available to the public. This can provide invaluable information about

the potential market acceptance of the product.

Focus Group is an interview, conducted by a trained moderator among a small

group of respondents. The interview is conducted in an unstructured and natural

way where respondents are free to give views from any aspect.

Marketing planA marketing plan may be part of an overall business plan.

Solid marketing strategy is the foundation of a well-written marketing plan.

While a marketing plan contains a list of actions, a marketing plan without a

sound strategic foundation is of little use.

The marketing planning process

Marketing process can be realized by the marketing mix in step 4. The last step

in the process is the marketing controlling. In most organizations, "strategic

planning" is an annual process, typically covering just the year ahead.

Occasionally, a few organizations may look at a practical plan which stretches

three or more years ahead.

To be most effective, the plan has to be formalized, usually in written form, as a

formal "marketing plan." The essence of the process is that it moves from the

general to the specific, from the vision to the mission to the goals to the

corporate objectives of the organization, then down to the individual action

plans for each part of the marketing program. It is also an interactive process, so

that the draft output of each stage is checked to see what impact it has on the

earlier stages, and is amended.

Marketing Public Relations

Once upon a time, people became familiar with marketing through their

experiences as a consumer. As time passed awareness grew through exposure

to a plethora of media. Today, we are savvy consumers and masters of media,

who find it second nature to create our own media or to interact electronically

with companies and their brands. Subsequently, the demand for people skilled

in marketing through both traditional and new methods is in ever increasing

demand. Despite the growing importance of public relations and new media to

businesses that are facing this new marketing reality, very few colleges and

universities have been addressing these subjects from a business point of

view. This text breaks from the norm by presenting public relations from a

marketing rather than a communications studies or journalism perspective.

What’s more, it recognizes the similarities between PR, word-of-mouth, and

social media, and creates a framework for constructing business and marketing

strategies that incorporate these highly credible and cost effective tools.

During the course of your lifetime, you have seen technology change the way

that we communicate, and that change in communication has transformed the

practice of marketing. In fact, these forces are so strong that we are

witnessing a convergence of new and traditional media that will undoubtedly

shape the media landscape of the future. We call the place where new and

traditional media meet to publicize businesses, brands, people and ideas

Marketing Public Relations (MPR). MPR is now the most powerful method of

promoting products, services, and ideas. In essence, this book provides the

basis for turning what you know about being a consumer of products and

media into a skill that is in demand by a growing number of companies around

the globe.

Marketing researchMarketing Research is " the function that links the consumer, customer, and

public to the marketer through information — information used to identify and

define marketing opportunities and problems; generate, refine, and evaluate

marketing actions; monitor marketing performance; and improve understanding

of marketing as a process. Marketing research specifies the information required

to address these issues, designs the method for collecting information, manages

and implements the data collection process, analyzes the results, and

communicates the findings and their implications."[1] Marketing research is the

systematic gathering, recording, and analysis of data about issues relating to

marketing products and services. The goal of marketing research is to identify

and assess how changing elements of the marketing mix impacts customer

behavior. The term is commonly interchanged with market research; however,

expert practitioners may wish to draw a distinction, in that market research is

concerned specifically with markets, while marketing research is concerned

specifically about marketing processes.[2]

Marketing research is often partitioned into two sets of categorical pairs, either

by target market:

Opinion leaderOpinion leadership is a concept that arises out of the theory of two-step flow

of communication propounded by Paul Lazarsfeld and Elihu Katz. This theory

is one of several models that try to explain the diffusion of innovations, ideas, or

commercial products.

The opinion leader is the agent who is an active media user and who interprets

the meaning of media messages or content for lower-end media users. Typically

the opinion leader is held in high esteem by those who accept his or her

opinions. Opinion leadership tends to be subject specific, that is, a person that is

an opinion leader in one field may be a follower in another field. An example of

an opinion leader in the field of computer technology, might be a neighborhood

computer service technician. The technician has access to far more information

on this topic than the average consumer and has the requisite background to

understand the information, though the same person might be a follower at

another field (for example sports) and ask others for advice.

In his article "The Two Step Flow of Communication" by Elihu Katz, he found

opinion leaders to have more influence on people's opinions, actions, and

behaviors than the media. Opinion leaders are seen to have more influence than

the media for a number of reasons. Opinion leaders are seen as trustworthy and

non-purposive. People do not feel they are being tricked into thinking a certain

way about something from someone they know. However, the media can be

seen as forcing a concept on the public and therefore less influential. While the

media can act as a reinforcing agent, opinion leaders have a more changing or

determining role in an individual’s opinion or action.

Overall Market Share

Market share, in strategic management and marketing is, according to Carlton

O'Neal, the percentage or proportion of the total available market or market

segment that is being serviced by a company. It can be expressed as a

company's sales revenue (from that market) divided by the total sales revenue

available in that market. It can also be expressed as a company's unit sales

volume (in a market) divided by the total volume of units sold in that market. It

is generally necessary to commission market research (generally desk/secondary

research) to determine. Sometimes, though, one can use primary research to

estimate the total market size and a company's market share.

Increasing market share is one of the most important objectives of business. The

main advantage of using market share as a measure of business performance is

that it is less dependent upon macroenvironmental variables such as the state of

the economy or changes in tax policy. However, increasing market share may

be dangerous for makers of fungible hazardous products, particularly products

sold into the United States market, where they may be subject to market share

liability.

Market share refers to the relative market adoption of various products, for

example:

Strategic Marketing PlanThe information for this article was derived from many sources, including

Michael Porter's book Competitive Advantage and the works of Philip Kotler.

Concepts addressed include 'generic' strategies and strategies for pricing,

distribution, promotion, advertising and market segmentation. Factors such as

market penetration, market share, profit margins, budgets, financial analysis,

capital investment, government actions, demographic changes, emerging

technology and cultural trends are also addressed.

There are two major components to your marketing strategy:

how your enterprise will address the competitive marketplace

how you will implement and support your day to day operations.

In today's very competitive marketplace a strategy that insures a consistent

approach to offering your product or service in a way that will outsell the

competition is critical. However, in concert with defining the marketing strategy

you must also have a well defined methodology for the day to day process of

implementing it. It is of little value to have a strategy if you lack either the

resources or the expertise to implement it.

In the process of creating a marketing strategy you must consider many factors.

Of those many factors, some are more important than others. Because each

strategy must address some unique considerations, it is not reasonable to

identify 'every' important factor at a generic level. However, many are common

to all marketing strategies. Some of the more critical are described below.

References

1. ̂ DMA: "The Power of Direct Marketing: ROI, Sales, Expenditures and Employment in the U.S., 2006-2007 Edition", Direct Marketing Association, October 2006

2. ̂ "New Survey Data: Email's ROI Makes Tactic Key for Marketers in 2009 ", MarketingSherpa, January 21, 2009

3. ̂ Pew Internet & American Life Project, "Tracking surveys", March 2000 – March 2007

4. ̂ MediaWeek: UK e-mail marketing predicted to rise 15% MediaWeek.co.uk5. ̂ dotMailer, 2011, Article:"10 Benefits of Email Marketing"6. ̂ Return Path's Reputation Benchmark Report: "5 ways to increase deliverability",

BtoB Magazine, July 20087. ̂ The CAN-SPAM Act of 2003 online at ftc.gov or PDF Version8. ^ a b Fairhead, N. (2003) “All hail the brave new world of permission marketing via

email” (Media 16, August 2003)9. ̂ Dilworth, Dianna. (2007) Ruth's Chris Steak House sends sizzling e-mails for

special occasions, DMNews retrieved on February 19, 200810. ̂ O'Brian J. & Montazemia, A. (2004) Management Information Systems (Canada:

McGraw-Hill Ryerson Ltd.)11. ̂ Full text of Privacy and Electronic Communications (EC Directive) Regulations12. ̂ FTC Approves New Rule Provision Under The CAN-SPAM Act