managing integrated marketing channel

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Chapter 15



The Topics

What is marketing channels 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 channels

and manage channel conflict? What are the key issues with e-commerce

and m-commerce?



Advertising and promotionManufacturers’ sales force and

trade promotion money

Marketing Channels

1. Marketing Channel & Value Network : Definitions

Sets of interdependent organizations participating in the process of making a product or

services available for use or consumption

Marketing Channel

Push Marketing

Hybrid /

Multichannel

Pull Marketing

Mix – Push Pull Marketing Strategy

Merchant : Wholesalers and retailers

Agent : Brokers, manufacturers’ representative, sales agents

Facilitator : transportation companies, independent

warehouse, bank, advertising agencies



Some Examples of Marketing Channel




Value Network


Value Network

A system of partnership and alliances that a firm creates

to source, augment and deliver its offering

Including :• A firm suppliers and its suppliers’ suppliers

• Intermediate customers and end customers

• Others such university researchers and government

approval agencies



Some Examples of Value Network




Key Function of Marketing Channel Members

2. The Role of Marketing Channel

• Gather information about potential and current

customers, competitors and other actor and forces in

marketing environment

• Develop and disseminate communication to stimulate

purchasing

• Negotiate and reach agreements on price and other

terms so that transfer of ownership or possession can

be affected

• Place orders with manufacturers

• Acquire the funds to finance inventories at different

levels in the marketing channel

• Assume risks connected with carrying out channel work• Provide for the successive storage and movement of

physical products

• Provide for buyers’ payment of their bills through bank

and other sinancial institution

• Oversee actual transfer of ownership from one

organization or person to another

Storage & Movement

Title

Communication

Ordering

Payment

Information

Negotiation

Finance

Risk Taking



Channel Level


Manufacturer Manufacturer Manufacturer Manufacturer Manufacturer Manufacturer Manufacturer Manufacturer

Consumer Marketing Channels Industrial Marketing Channels

Wholesaler Wholesaler

Jobber

Retailer

Customer

0-level 1-level 2-level 3-level 0-level 1-level 2-level 3-level

RetailerRetailer

CustomerCustomerCustomerIndustrial

Customer

Industrial

Customer

Industrial

Customer

Industrial

Customer

Industrial

Distributor

Manufacturerrepresentative

Manufacturersales branch



Some Examples




How to Design Market Channel

3. Channel Design

1. Analyzing Customer Needs and Wants• Different customer have different needs during the purchase process

• Same customer may choose different channels for different functions in

a purchase

• Channels produce 5 services output : lot size, waiting & delivery time,

spatial convenience, product variety and service backup

2. Establishing Objectives and Constraints• Objective : vary with product characteristics (bulky

product, non-standard product, product requiring

installation and high-unit-value product)

• Constraints : Legal regulation and restrictions

3. Identify and Evaluate Major Channel Alternatives• Each channel has unique strength and weakness

• Identifying major channel alternatives is based on three factors :

• Type of intermediaries

• Number of intermediaries

• Terms and responsibilities of channel member



Customer Preference : Customer Value

3. Channel Design

50France

Germany

UK

32 18

16 39 45

15 19 66

Service/ quality

customers

Price/value

customers

Affinity

customers

% of respondents

Clothing

40France

Germany

UK

27 25

13 42 45

13 32 55

Service/ qualitycustomers Price/valuecustomers Affinitycustomers

% of respondents

Grocery



Value-Adds vs Costs of Different Channels

3. Channel Design

Internet

Value-added

partners

Retail Stores

Distributors

Telemarketing

Sales force

Low High

High

V a l u e - a d d

o f S a l e

Cost per transaction



Some Examples of Channel Design

3. Channel Design



Some Decisions in Managing Channels

4. Channel-Management Decisions

1. Selecting Channel Members

2. Training and Motivating Channel Members

3. Evaluating Channel members

4. Modifying Channels Design and Arrangements

5. Global Channel Considerations



Some Examples of Channel-Management

Decisions

4. Channel-Management Decisions

h l h l fl



Channel Integration

5. Channel Integration & Channel Conflict Management

• Producer, wholesaler and retailer act as a

unified system

• Strong channel member attempt to

control channel behaviour and eliminateconflict between members of system

• Consists of three type : Corporate VMS,

Administered VMS and Contractual VMS

Channel

Integration

1. Vertical Marketing System 2. Horizontal Marketing System

• Two or more unrelated companies put

together resources or programs to exploit

an emerging market opportunity

• Strategic fit between member of system :capital, know-how, marketing resources,

risk, etc

3. Integrating Multichannel Marketing System

• Multichannel marketing

• Create more benefit : market coverage, lower channel cost,

more customized selling

• Trade off : more conflict and problem may occur in control

and co-operation

Ch l I i & Ch l C fli



Some Examples of Channel Integration


5 Ch l I i & Ch l C fli M



Channel Conflict Management


1. Strategic Justification

2. Dual Compensation

3. Superordinate goals

4. Employee exchange

5. Joint memberships

6. Co-optation

7. Diplomacy, mediation or arbitration

8. Legal recourse

5 Ch l I t ti & Ch l C fli t M t



Some Examples of Channel Conflict

Management


6 K I i d



Issue in E-Commerce and M-Commerce

6. Key Issue in e-commerce and m-commerce

E-Commerce

• Quality of web site (simplicity,

fast and easy to use)

• Security & privacy• Payment options

• Attractive interface

• Existence and quality of customer

services

• Social interaction

• Penetration of smartphone

• Penetration and adoption of 3G

• Payment options

• Mobile application

• Internet tariff

M-Commerce

6 K I i d



6. Key Issue in e-commerce and m-commerce

managing integrated marketing channel

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