Chapter 17kisi.deu.edu.tr/banu.atrek/MBA 5011 Strategic Marketing Management... · •Channel conflict – Generated when one channel member’s actions prevent another channel member

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Chapter 17

DesigningAnd Managing

Integrated Marketing Channels


Marketing Channelsand Value Networks

• Marketing channels– Sets of interdependent organizations

participating in the process of making a product or service available for use or consumption

– Intermediaries:• Merchants (buy and resel: wholesalers, retailors , • Agents (search for customers and may negotiate on the

producer’s behalf)• Facilitators (assist in the distribution process: transportation

companies, independent warehouses, banks, advertising agencies)



• A marketing channel system– The particular set of marketing channels a

firm employs– Push (sales force) vs. pull strategy

(advertising, promotion)



• The digital channels revolution– Customer support in

store/online/phone– Check online for product

availability at local stores– Order product online to

pick up at store– Return a product

purchased online to a nearby store



• Multichannel marketing– Using two or more

marketing channels to reach customer segments in one market area

– Omnichannel marketing– Integrated marketing

channel system


Figure 17.1The Hybrid Grid



• Value network– A system of partnerships and alliances that a

firm creates to source, augment, and deliver its offerings

– Demand chain planning


The Role ofMarketing Channels

• Channel functions and flows


Figure 17.2Marketing Flows For Forklift Trucks


The Role ofMarketing Channels

• Channel levels– Zero-level channel (direct ex. Mailorder, online selling,

telemarketing, manufacturer owned stores)– One/two/three-level channels (intermediaries)– Reverse-flow channels

• to reuse products or containers (such as refillable chemical-carrying drums)

• to refurbish products for resale (such as circuit boards or computers)

• to recycle products• to dispose of products and packaging


Figure 17.3Consumer/Industrial Marketing Channels


Channel-Design Decisions

• Analyzing different customer needs and wants during purchase process

SERVICE OUTPUTS OF CHANNELS Desired lot sizeWaiting and delivery time Spatial convenience Product variety Service backup



• Identifying major channel alternatives

Types of intermediaries

Number of intermediaries

Terms/responsibilities of channel members


Identifying major channel alternatives

• Number of intermediaries– Exclusive

distribution– Selective

distribution– Intensive

distribution



• Evaluating major channel alternatives– Economic criteria– Control and adaptive criteria


Channel-Management Decisions

Selecting channel

members

Training channel

members

Evaluating channel

members

Modifying channel design

Channel modification

decisions

Global channelconsiderations


Training and Motivating Channel Members

• Channel partnerships and Efficient Consumer Response practices– Demand-side management (stimulating

demand collectively)– Supply-side management– Enablers and integrators (collaborative

information technology and process improvement tools to support joint activities that reduce operational problems)


Channel Integration and Systems• Conventional marketing channel

– producer, wholesaler(s), and retailer(s). Each is a separate business, no complete control over other members

• Vertical marketing systems– unified system, one channel member owns or

franchises the others or has so much power that they all cooperate

• Horizontal marketing systems– two or more unrelated companies in the same industry

lacks the capital, know-how, production, or marketing resources to venture alone


VerticalMarketing Systems

• Corporate VMS- single ownership

• Administered VMS- coordination through the biggest and most powerful member

• Contractual VMS– Franchise organizations

• New competition in retailing


E-CommerceMarketing Practices

• E-commerce– Uses a Web site to transact or facilitate the

sale of products and services online• Pure-click vs. brick-and-click companies


M-CommerceMarketing Practices

• Mobile channels and media can keep consumers as connected and interacting with a brand as they choose– Advertising and promotion– Geofencing (to target customers with a mobile promotion,

typically near or in a store)

• Privacy issues

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Conflict, Cooperation,and Competition

• Channel conflict– Generated when one channel member’s

actions prevent another channel member from achieving its goal

• Channel coordination– Occurs when channel members are brought

together to advance the goals of the channel instead of their own potentially incompatible goals



• Types of conflict and competition

Horizontal channel conflict

Vertical channel conflict

Multichannel conflict



• Causes of channel conflict

Goal incompatibility Unclear roles and rights Differences in perception Intermediaries’ dependence on

manufacturer
