Marketing 624Marketing 624
Channels of Distribution Management
Marketing Channel Strategy
Dr. Bert Rosenbloom Professor of Marketing and
Rauth Chair in Electronic Marketing
The broad principles by which the firm expects to achieve its distribution objectives for its
target market(s)
Channel StrategyChannel Strategy
What role should distribution play in the firm’s overall objectives and strategies?
What role should distribution play in the marketing mix?
How should the firm’s marketing channels be designed to achieve its distribution objectives?
Six Fundamental Strategic Distribution
Decisions
What kinds of channel members should be selected to meet the firm’s distribution objectives?
How can the marketing channel be managed to implement the firm’s channel design effectively and efficiently?
How can channel member performance be evaluated?
Six Fundamental Strategic Distribution Decisions
(Cont’d)
Those decisions involving the development of new marketing
channels where none had existed before, or the modification of
existing channels
Channel DesignChannel Design
The design of the channel should contribute to the firm’s quest for
Differential Advantage
Channel Design and Differential Advantage
Recognize need for channel design decision
Set and coordinate distribution objectives
Specify distribution tasks
Develop possible alternative channel structures
Evaluate variables affecting channel structure
Choose the best channel structure
Select the channel members
Paradigm of the Channel Design
Decision
Obvious examples pp. 200-201 in text
But many times the need to make channel design decisions is not obvious
Channel Design Decision
Phase 1:
Recognize Need for Channel Design Decision
Channel Design Decision
Phase 2:
Set & Coordinate Distribution Objectives Become familiar with objectives of firm
Set explicit distribution objectives
Check for congruency
Channel Design Decision
Phase 3:
Specifying Distribution Tasks
Don’t underestimate all of the “nuts and bolts” necessary to make
products and services conveniently available to customers
Channel Design Decision
Phase 4:
Develop Alternative Channel Structures
Number of levels
Intensity at various levels
Types of intermediaries
Channel Design DecisionPhase 5:
Evaluate Variables Affecting channel Structure
Market variables
Product variables
Company variables
Intermediary variables
Environmental variables
Behavioral variables
Heuristics play an important roleHeuristics play an important role
Channel Design Decision
Phase 6:
Choosing the “Best” Channel Structure
Product-based models (Aspinwall)
Financial Approach
Transaction Cost Analysis Approach
Management Science Approach
Judgmental –Heuristic Approach
Channel Design Decision
Phase 7:
Select the Channel Members
Finding perspective channel members
Applying selection criteria
Securing perspective channel members
Work “backwards” from what the final customers wants. A “bottom
up” approach.
Target Markets and Channel Design Strategy
Market geography
Market size
Market density
Market behavior
when customers buy
where customers buy
how customers buy
who buys
Framework for Market Analysis
Who makes physical purchase?
Who uses the product?
Who influences the buying decision?
Who Buys?Who Buys?
The administration of existing channels to secure the cooperation of channel members in achieving the firm’s distribution objectives
Channel Channel ManagementManagement
Find out needs and problems Offer support consistent with
channel member needs Provide leadership
Motivating Channel Members
“Grapevine” (informal communications network)
Inside research
Outside research Marketing channel audit
Distributor advisory councils
Learning About Channel Members Needs and
Problems
Cooperative approach
Partnership approach
Distribution programming approach
Support for Channel Members
New Product Planning and Development
Product Life Cycle
Strategic Product Management
Product Issues in Channel
Management
Channel member input
Acceptability
Fit with channel member assortments
Education and training
Problems?
New Product Planning and Development
Introduction
Growth
Maturity
Saturation
Absolute decline
Product Life CycleWhat are the channel management
implications during each stage?
Product differentiationProduct positioningProduct line expansion
and contractionTrading up and trading
downBrand strategyService strategy
Strategic Product Management
Cost
Market
Competition
Channels
Pricing in Channel Management
Pull versus Push Promotional Strategy
Vs.
Promotion Through the Channel
Cooperative advertising
Promotional allowances
Displays and selling aids
In-store promotions
Contests and incentives
Special promotional deals and merchandise campaigns
Classic Push Promotional Strategies
Training
Quotas
Missionary selling
Trade shows
“Kinder and Gentler” Push Promotional
Strategies