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Designing and Managing ValueNetworks and Channels
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Marketing Channels
Sets of interdependent organizationsinvolved in the process of making aproduct or service available for use
or consumption.
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Channels andMarketing Decisions
PushStrategy
Sales force Trade promotions Low brand loyalty Impulse products
Pull
Strategy Advertising(or) promotions Persuade consumersto demand the product
High brand loyalty
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Buyer Expectations for Channel Integration Ability to order a product
online and pick it up at aconvenient retail
location Ability to return an
online-ordered productto a nearby store
Right to receivediscounts based on totalonline and offline
purchases
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Value Network & Role of marketing channels Is a system of
partnerships andalliances that a firm
creates to source,augment and deliver itsofferings.
Moving goods fromproducers toconsumers
Forward flow Backward flow Horizontal flow
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Increasing Efficiency
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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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Suppliers TransportersWarehouses
Manufacturers Transporter s,warehouses
Transporter sDealers
Customer s
1. Physical Flow
Suppliers Manufacturers Dealers Customers
2. Title Flow
CustomersBanksDealersTransporters,Warehouses,
BanksManufacturersBanksSuppliers
3. Payment flow
Fig. 15.2 Five Marketing Tools for the Marketing Channel of Forklift Trucks
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Internet Makes DirectDistribution Easier
Internet Makes DirectDistribution Easier
Greater Control
Lower Cost
Direct Contact withCustomer Needs
Quicker Response or Change in Marketing Mix
Greater Control
Lower Cost
Direct Contact withCustomer Needs
Quicker Response or Change in Marketing Mix
Suitable MiddlemenNot Available
Channel System May Be Direct or Indirect
SomeReasonsFor ChoosingDirect Channels
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Consumer Marketing Channels
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Industrial Marketing Channels
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Channel Systems Can Be Complex
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Channel Objective Channel institutions should
arrange their functional tasks
to minimize total channelcosts and still provide
desired levels of serviceoutputs
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Intensive
Selective
Intensive
Selective
The Best Channel System Should Achieve IdealMarket Exposure
= number ofoutletsExclusive
MarketExposureStrategies
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Break-Even Chart for the Choice Between ACompany Sales Force and ManufacturersSales Agency
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Channel Power
Coercive Withdraw or terminate
relationship
Reward Extra benefit for performing
specific acts or functions
Legitimate Contract requirements
Expert Special knowledge
Referent Highly respected
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Vertical Marketing Systems Focus on Final Customers
Fairly goodto good
Contracts
McDonalds
Complete
Onecompany
ownership
Florsheim
Some togood
Economicpower andleadership
GeneralElectric
Characteristics
Type of channel
Little or none
None
Typicalinde -
pendents
Amount of cooperation
TraditionalVertical marketing systems
Administered Contractual Corporate
Control maintained
by
Examples
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Retailer Retailer Retailer
Horizontal Arrangements Are Illegal
Limiting Market Exposure
Retailer Retailer
Producer
Vertical ArrangementsMay Be Legal Wholesaler
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Managing Channel Conflict
Adoption of superordinate goals (joint effort to achieve goal)
Cooptation (include leaders of another
organization on advisory
councils, boards of directors) Diplomacy (person or group to meet to
resolve conflict) Mediation
(neutral third party conciliatetwo parties interests)
Arbitration (arbitrator makes the decision)
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Producers or Middlemen May Be Channel Captains
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e-Commerce Marketing Practices
Pure-click (launched a website
without any previousexistence as a firm
Amazon, ebay) Brick-and-click
(existing companies thathave added an onlinesite for information &/or e-commerce Compaq,Barnes & Noble)
Brick-and-mortar
http://www.chefswarehouse.com/