13Designing and Managing

Integrated Marketing Channels

Chapter Questions

What is a marketing channel system and value network?What work do marketing channels perform?What decisions do companies face in designing, managing and integrating their channels?What key issues do companies face in e-commerce?

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What is a Marketing Channel?

A marketing channel system is the particular set of

interdependent organizations involved in the process of

making a product or service available for use or

consumption.

Intermediaries

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Merchants

Agents

Facilitators

Hybrid Channels

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Direct

Online

Indirect

Customer expectations from channel integration

Ability to order a product online and pick it up at a convenient retail locationAbility to return an online-ordered product to a nearby storeRight to receive discounts based on total online and offline purchases

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Push vs. Pull Marketing

Push strategy – using manufacturer’s sales force, trade promotion money and other means to induce intermediaries to carry, promote and sell the product to end users.

Pull strategy - using advertising, promotion, and other forms of communication to persuade consumers to demand the product from intermediaries.

What European Consumers Value

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The Role of Marketing Channels

Gather customer and other informationDevelop and disseminate persuasive communications to stimulate purchasingReach agreements on price and other termsAcquire funds to finance inventoriesAssume risksProvide place for storageProvide buyers with payment optionsOversee actual transfer of ownership

Marketing Flows in the Marketing Channel

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Marketing Channel Levels

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Consumer Marketing Channels

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Industrial Marketing Channels

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Reverse-Flow Channels

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Designing a Marketing Channel System

Analyze customer needs

Evaluate major channel alternatives

Identify major channel alternatives

Establish channel objectives

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Analyzing Csstomers’ Desired Service Output Levels

Lot size

Waiting/delivery time

Spatial convenience

Product variety

Service backup

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Establishing Objectives and Constraints

Targeted service output levelsMarkets chosen to serveProduct characteristicsStrengths and weaknesses of intermediariesCompetition’s channelsEnvironmental changes

Identifying Channel Alternatives

Types of intermediaries(merchants, agents, facilitators)

Number of intermediaries(exclusive, selective, intensive)

Terms and responsibilities(price policy, sale conditions, distributors’ territorial rights,

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Number of Intermediaries

Exclusive

Selective

Intensive

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Evaluating Major Channel Alternatives

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Break-Even Cost Chart

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Channel-Management Decisions

Selecting channel membersTraining and motivating channel membersEvaluating channel membersModifying channel members

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Channel Power

Coercive

Reward

Legitimate

Expert

Referent

Channel Integration and Systems

Vertical marketing systems

Corporate VMSAdministered VMSContractual VMS

Horizontal marketing systems

Integrated multi-channel systems

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Integrated Marketing Channel SystemThe Hybrid Grid

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Channel Conflict and Cooperation

Channel conflict occurs when one member’s actions prevent another channel from achieving its goal.Types: Vertical, Horizontal, MultichannelCauses: goal incompatibility, perception differences, dependence

Channel cooperation occurs when channel members are brought together to advance the goals of the channel, as exposed to their own potential incompatible goals.

Strategies for Managing Channel Conflict

Strategic justificationDual compensationSuperordinate goalsEmployee exchangeJoint memberships

CooptationDiplomacyMediationArbitrationLegal recourse

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E-Commerce

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Pure-click companies(search engines, ISPs, commerce / transaction /

content / enabler sites; B2C, B2B )

Brick-and-click companies

M-Commerce

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