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Designing and Managing

Integrated

Marketing Channels

15

Marketing Management

A Sou th Asian Perspect ive, 13th

ed

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Copyright 2009 Dorling Kindersley (India) Pvt. Ltd. 15-2

Chapter Questions

What is a marketing channel system and

value 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 channelsand manage channel conflict?

What are the key issues with e-commerce?

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Raymond

presents

world-class

experience

through its

stores

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What is a Marketing Channel?

A marketing channelsystem is the

particular set of interdependent

organizations involved in the process of

making a product or service available

for use or consumption.

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Channels and

Marketing Decisions

A push strategyuses the manufacturerssales force, trade promotion money, andother means to induce intermediaries to

carry, promote, and sell the product to endusers.

A pull strategyuses advertising, promotion,and other forms of communication to

persuade consumers to demand the productfrom intermediaries.

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Aldi Adjusted Its Strategy

for the U.S. Market

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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 andoffline purchases

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Rural Distribution

Traditional Channels

for Reaching Out toRural Customers

Haats

Mandis

Melas

Innovative Distribution

Channels for RuralMarkets

Hub and Spoke

Model

Mobile shops and offices

Linkage with community

based organizations

(SHGs, NGOs, andcooperatives

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Categories of Buyers

Habitual shoppers

High value deal seekers

Variety-loving shoppers

High-involvement shoppers

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Types of Shoppers

Service/quality customers

Price/value customers

Affinity customers

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Channel Member Functions

Gather information

Develop and disseminate persuasive

communications

Reach agreements on price and terms

Acquire funds to finance inventories

Assume risks

Provide for storage Provide for buyers payment of their bills

Oversee actual transfer of ownership

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Figure 15.2 Marketing Channel Flows

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Figure 15.3

Consumer Marketing Channels

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Figure 15.3

Industrial Marketing Channels

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Designing a

Marketing Channel System

Analyze customer needs

Evaluate major channel alternatives

Identify major channel alternatives

Establish channel objectives

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Channel Service Outputs

Lot size

Waiting/delivery time

Spatial convenience

Product variety

Service backup

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Number of Intermediaries

Exclusive

Selective

Intensive

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Terms and Responsibilities

of Channel Members

Price policy

Condition of sale

Distributors territorial rights

Mutual services and responsibilities

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Figure 15.4 The Value-Adds vs. Costs

of Different Channels

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Figure 15.5 Break-Even Chart for the

Choice Between a Company Sales Force

and Manufacturers Sales Agency

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Channel-Management Decisions

Selecting channel members

Training channel members

Motivating channel members

Evaluating channel members

Modifying channel members

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Channel Power

Coercive

Reward

Legitimate

Expert

Referent

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Channel Integration and Systems

Vertical marketing

systems

Corporate VMS

Administered VMS

Contractual VMS

Horizontal

marketing systemsMultichannel

systems
http://www.sherwin-williams.com/

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Causes of Channel Conflict

Goal incompatibility

Unclear roles and rights

Differences in perception

Intermediaries dependence

on the manufacturer

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Table 15.3 Strategies for Managing

Channel Conflict

Adoption of

superordinate goals

Exchange of

employees Joint membership in

trade associations

Cooptation

Diplomacy

Mediation

Arbitration

Legal recourse

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e-Commerce Marketing Practices

Pure-click Brick-and-click

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Marketing Debate

Does it matter where you are sold?

Take a position:

1. Channel images do not really affectthe brand images of the products they

they sell that much.

or

2. Channel images must be consistent with

the brand image.

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Marketing Discussion

Think of your favorite retailers.

How have they integrated their

channel system? How would you like their channels to

be integrated?

Do you use multiple channels fromthem? Why?

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