V47 Ch15 Designing And Managing Integrated Marketing Channels

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Designing and Managing Integrated Marketing Channels

Anthony T. MedallaAteneo Graduate School of Business

December 1, 2009

Outline:Designing and Managing Integrated Marketing Channels

1. Importance of marketing channels and values network

Channel development Hybrid Channels

2. Understanding customer needs and value network

Factors that consumers consider Buyers/shoppers category Value Network


SIVA replaced the traditional marketing 4 P’s

3. The role of marketing channels Channel functions and flows Channel levels Service sector channels

4. Channel design decisions

5. Establishing objectives and Constraints


6. Identifying and Evaluating Major Channel Alternatives

Types of Intermediaries Strategies

7. Channel management decisions Selecting Channel Members Training and Motivating Channel Member

8. Channel integration systems Vertical Marketing Systems


Integrated Multichannel Marketing System Horizontal Marketing Systems

9. Conflict, cooperation and competition Types of conflict and competition Causes of Channel Conflict Managing Channel Conflict Dilution and Cannibalization Legal and ethical issues in channel relations


10. E-commerce marketing practices Pure-Click Companies Brick and Click Companies M-Commerce

Importance of marketing channels and values network

The importance of Channels Affect all other marketing decisions Represent a substantial opportunity cost Convert potential buyers to profitable customers Channels consist of intermediaries or trade

channels Strategies in managing intermediaries

Push strategy - intermediaries’ promotional initiative Pull strategy – manufacturer’s promotional initiative

Channel Development Successful firm branch into new markets Test new channel approach

Hybrid Channels Also known as go-to-market (direct to

customers style)

Importance of marketing channels and values network

Factors that consumers consider Price Product assortment Convenience of a channel option Own particular shopping goals (economic,

social or experiential)

Understanding customer needs and value network

Buyers/shoppers category Habitual shoppers High-value deal seekers Variety-loving shoppers High-involvement shoppers


Value Network Think of a target market Design the backward supply chain from the target market

SIVA replaced the traditional marketing 4 P’s Solutions Information Value access


Channel functions and flows Performs the moving goods from producers to consumers

Channel levels Zero level (direct marketing)- manufacturer selling directly

to consumer One level – contains one selling intermediary e.g. retailer Two level – contains two intermediary (wholesaler, retailer)

The role of marketing channels

Three level – contains three intermediary (wholesaler, jobber, retailer)

Service sector channels Services that needs to be delivered to

consumers (e.g. health/medical service, education, etc)

The role of marketing channels

System requires… Analyzing Customer needs Establishing channel objectives

Channel Design Decisions

Lot size Waiting and delivery time Spatial convenience Product variety Service backup

Analyzing Customer’s Desired Service Output Levels

Should state the channel objectives Establish targeted service output levels Put in mind objectives vary with product

characteristics Should prepare the objectives to larger environment

Establishing Objectives and Constraints

Types of Intermediaries Strategies Exclusive Distribution – limiting the number of intermediaries Selective Distribution – relies on more than a few but less

than all of the available intermediaries Intensive Distribution – places goods/products to all available

outlets.

Identifying and Evaluating Major Channel Alternatives

Selecting Channel Members- Producers should determine the selected

intermediaries- Evaluate the intermediaries reputation (yrs of

experience, carried growth, profit record, etc.)

Channel Management Decisions

Training and Motivating Channel Member Coercive power – relation withdrawal Reward power – extra benefit Legitimate power – contract/SLA ‘s Expert power – manufacturer’s expert knowledge Referent power – intermediaries’ reputation

Channel Management Decisions

Vertical Marketing Systems Corporate VMS Administered VMS Contractual VMS

Horizontal Marketing SystemsIntegrated Multichannel Marketing Systems

Channel Integration and Systems

Types of conflict and competition Vertical Channel conflict Horizontal Channel conflict Multichannel conflict

Causes of Channel Conflict Goal incompatibility Unclear roles and rights

Conflict, Cooperation and Competition

Differences in preception Intermediaries’ dependence on the manufacturer

Managing Channel Conflict Adaptation of superordinate goals Exchange of employees Joint membership in trade associations Co-optation


Diplomacy, mediation, or arbitration Legal recourse

Dilution and Cannibalization-avoid to dilute brand/product due to inappropriate channels

Legal and ethical issues in channel relations


Pure-Click Companies search engines Internet service providers (ISP) Commerce sites Transaction sites Content sites Enabler sites

E-Commerce Marketing Practices

Brick and Click Companies Combination of internet and retail selling

M-Commerce Purchasing thru cell phone or PDA’s

E-Commerce Marketing Practices

Summary: Designing and Marketing Integration Marketing Channels

1. Importance of marketing channels and values network

2. Understanding customer needs and value network

3. The role of marketing channels 4. Channel design decisions

5. Establishing objectives and Constraints

Summary: Designing and Marketing Integration Marketing Channels

6. Identifying and Evaluating Major Channel Alternatives

7. Channel management decisions8. Channel integration systems9. Conflict, cooperation and competition10. E-commerce marketing practices

Conclusion: Designing and Marketing Integration Marketing Channels

Successful value creation needs successful value delivery thru various marketing channels