CH 15 Designing and Managing

Value Networks and Channels

Kotler Koshy

Keller Jha

MARKETING CHANNELS

15-2

Sets of interdependent organizationsinvolved in the process of making a product or service available for use

or consumption.

CHANNELS AND MARKETING DECISIONS

15-3

Push

Strategy

Pull

Strategy

Habitual shoppers

High value deal seekers

Variety-loving shoppers

High-involvement shoppers

CATEGORIES OF BUYERS

15-4

• 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 and offline purchases

BUYER EXPECTATIONS FOR CHANNEL INTEGRATION

15-5

• 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

CHANNEL MEMBER FUNCTIONS

15-6

• Analyze customer needs• Establish channel

objectives• Identify major channel

alternatives• Evaluate major channel

alternatives

DESIGNING A MARKETING CHANNEL SYSTEM

15-7

Types of intermediaries

Number of intermediaries

Terms and responsibilities

IDENTIFYING CHANNEL ALTERNATIVES

15-8

Selecting channel members

Training channel members

Motivating channel members

Evaluating channel members

Modifying channel members

CHANNEL-MANAGEMENT DECISIONS

15-9

Vertical marketing systems: one of the channel members may own the others, influence the others due to better bargaining power, or develop a contractual arrangement with the different channel members•Corporate VMS: one of the channel members exerts complete control over the rest of the channel partners and everyone follows the objectives and procedures as dictated by this dominant channel member.

•Administered VMS: is similar to a conventional distribution system except that there are greater inter-organizational relationships and sharing of an overall objective

•Contractual VMS: consists of independent firms operating at different channel levels and forming a system on a contractual basis

Horizontal marketing systems: Joining of two or more corporations on the same level for the purposes of pursuing a new marketing opportunity

Multichannel systems: a system in which a producer uses more that one channel of distribution, commonly, producers who use multichannel marketing systems operate their own retail stores as well as sell through other wholesalers and retailers

CHANNEL INTEGRATION AND SYSTEMS

15-10