What is a marketing channel system and value network?

What is Marketing Channel System and Value Network ?

Intermediaries between producers and final users constitute a marketing channel or trade channel or

distribution channel.

A marketing channel system is the particular set of marketing channels a firm employs, and decisions about it are the most critical ones management faces.

Marketing channels chief role is to convert potential buyers

into profitable customers.

In managing its intermediaries, the firm uses the combination of the following types of marketing :

Push strategy uses manufacturer’s sales force, trade promotion money to induce intermediaries to carry, promote and sell product

to end users.

Created by NILESH RANA of IIT BHU under the guidance of Prof. SAMEER MATHUR , IIM LUCKNOW

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In Pull strategy, manufacturer uses advertising, promotion etc. to persuade consumers to demand product from intermediaries.

Top marketing companies like CocaCola and Nike skilfully employ both push and pull strategies.

Philips, one of the world’s biggest electronics companies use multichannel marketing to get access to even the most remote customers.

The company offers broad range of products through :

Mass merchantsRetail chainsSpeciality chain storesVia webVia online retailersSmall stores

Value network - a system of partnerships and alliances that a firm creates to source , augment, and deliver its

offerings.

Apple Developer’s connection which has 50,000 members keep 70% of any revenue

their products generate, and Apple gets 30%.

Company can estimate whether more money is made upstream or downstream, in case it can

integrate forward or backward.

Through Demand chain planning :

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Company is more aware of the disturbances in the supply chain that might change costs,

prices or supplies.2

3Companies can go online with their business partners to speed communications,

transactions, and payments; reduce costs and increase accuracy.