designing and managing value network and channels chapter 15
TRANSCRIPT
Designing and Managing Value Network and
ChannelsChapter 15
Marketing Process
2
What is a Marketing Channel?
• A marketing channel system is the particular set of interdependent organizations involved in the process of making a product or service available for use or consumption
Buyer Expectations for Channel Integration
• 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 purchase
Example: customers of online store in Taiwan can easily pick up the goods in 7-11
Categories of Buyers
• Habitual shoppers • High value deal seekers• Variety-loving shoppers• High-involvement shoppers
Types of Shoppers
• Service/quality customers• Price/value customers• Affinity customers
Five Marketing Flows in the Marketing Channel
Flow
• Forward Flow:Activity from the company to the customer constituted by physical, title, promotion functions.
• Backward Flow:Activity from customer to the company constituted by ordering and payment functions.
Consumer and Industrial Marketing Channels
Channel Levels
• Zero-Level Channel (a.k.a. Direct Marketing Channel): consists of a manufacturer selling directly to the final customer
• One-Level Channel: contains one selling intermediary, such as retailer
• Two-Level Channel: contains two intermediaries• Three-Level Channel: contains three
intermediaries• Multi Channel: use several level at the same time
Channel Design Decision
• Push Strategy: involves manufacturer using its sales force to sell the product to end user
• Pull Strategy: involves manufacturer using advertising and promotion to induce consumers to ask intermediaries for the product, thus inducing the intermediaries to order it
• Designing a Channel System involves 4 steps:1. Analyze customers’ desired service output levels2. Establish objective and constraints3. Identify major channel alternatives4. Evaluate the major alternatives
Analyze Customers’ Desired Service Output levels
• Lot Size: the number of units the channel permits a typical customer to purchase on one occasion
• Waiting Time: the average time customers of that channel wait for receipt of the goods
• Spatial Convenience: the degree to which the marketing channel makes it easy for customers to purchase the product
• Product Variety: the assortment breadth provided by the marketing channel
• Service backup: the add-on service provided by the channel
Identify Major Channel Alternatives
• Types of Intermediaries:
- Company sales force
- Manufacturer’s Agency- Industrial Distributor
• Number of Marketing Intermediaries:
- Exclusive Distribution: giving a limited number of dealers the exclusive right to distribute the company’s products in their territories- Selective Distribution: the use of more than one, but fewer
than all, of the intermediaries who are willing to carry the company’s products- Intensive Distribution: stocking the product in as many outlets as possible
Terms of Responsibilities of Channel Members
• Price Policy: calls for the producers to establish a price list and schedule of discounts and allowances that intermediaries see as equitable and sufficient
• Conditions of Sale: payment terms and producer guarantees
• Distributors’ Territorial Rights: the distributors’ territories and the terms under which the producer will enfranchise other distributors
Channel Value Added and Market Growth Rate
Types of Conflict and Competition:- Vertical channel Conflict: conflict between
different levels within the same channels- Horizontal channel Conflict: conflict between
members at the same level within the channel- Multi channel Conflict: exist when the
manufacturer has established two or more channels that sell to the same market
Conflict, Cooperation & Competition
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