Submitted by: Mary Jane A.

Resente CBET-19-502E

Submitted to: Dr. Ester T. Edralin September 29, 2020

Chapter 3: The Environment of Marketing Channels

Summary:

This chapter provides information about how Marketing channels develop and operate in a complex
environment that is continually changing which channel managers must understand the environment
and how it can influence channel management in order to plan effective marketing channel strategies.
This chapter discuss about the 5 major environment that has an impact in the marketing channel. (1)
The Economic environment in which there are major phenomena arise, the Recession which the Gross
Domestic Product (GDP) is stagnant or increasing very slowly this will affect the firm to generate profit
easily, Inflation refers to is the rate of increase in prices for goods and services which will buyers will be
sensitive because of the increase of price and the deflation which are the opposite of the often-
encountered inflation that refers to the overall price level decreases that affect business to make the
most of their profit. (2) Competition refers to 4 types of competition, the Horizontal Competition refers
to competition between firms of the same type like for example apple and Samsung, Intertype
Competition a competition between different types of firms at the same channel level like Walmart and
Amazon which has different types of businesses that exist and operate at the same channel level,
Vertical Competition a competition between channel members at different levels in the channel like
competition between retailers' store brands (or private labels) and manufacturers' brands and Channel
System Competition viewed as Complete channels competing with other complete channels like
manufacturer, wholesaler, and retailer that fight with each other. While in the aspect of (3) Sociocultural
environment refers on the classification of people like Age patterns of population, Changing ethnic mix,
Educational trends, Family or household structure and Changing role of women. (4)Technological
Environment is about how technology will enhanced or improve in today’s businesses. (5) Legal
Environment refers to a set of laws that impact marketing channels, there are law that will affect the
distribution and sales of a firm which a channel manager should know to avoid legal problem and to
think a better strategy towards this restrictions. The us is have happen lot
Discussion Question #2

Almost 80 percent of chief financial officers at the 100 largest retailers say that too much
inventory is the greatest risk factor to the viability of their businesses during recessionary periods. High
inventories lead to heavy discounting when consumer demand is lacking. This, in turn, undermines gross
margins. When demand is very weak, gross margins can disappear completely as retailers may be forced
to liquidate slow moving merchandise at prices below their wholesale cost. Paradoxically, retailers also
worry about having too little inventory to meet consumer demand and thus losing sales when
consumers cannot find the products they are looking for on retailers’ shelves. Hence, retailers
attempting to manage their inventories during a recession often feel that when it comes to stocking
their shelves, they are damned if they do and damned if they don’t.

How might retailers deal with this inventory dilemma more effectively during recessionary
periods? What might suppliers do to help retailers address this problem?

 The best thing a retailers can do is to reduce the inventory, if they have a high inventories and a
lacking demand to that product it will lead to losses. To prevent this issue, retailers need to have
a record from time to time like for example recording the additional supplies, and keeping
details records of what to sell the most and what is not this will help them to have a better
decision to restocking a product or not. Lastly, retailers should come up with a great plan on
how the inventory should turn into a cash without giving lowest price than the price for their
wholesale by improving the appearance of the store and place the product that has a lot of
supply in the place where a customer can see easily.
 The suppliers should work out with the retailers by giving them a reasonable price in retailers to
avoid price offered does not match up to the products. This will help the retailers not to worry
about restocking their shelves or not. In addition, if the supplier will reduce their shipping cost
then it will be a great help to retailers to minimize the cost.

Discussion Question #3

Home Depot, Toys “R” Us, Staples, Best Buy and many other giant retailers (often referred to as
“category killers” or “big box” retailers because of their dominance in particular merchandise categories
and the sheer physical size of the stores) are fierce competitors and are frequently accused of driving
small retailers out of business. Observers who have witnessed this competitive struggle take place over
the past decade say the reason that small retailers go out of business is that they “can’t compete” with
these giants. The verdict in most cases has been “no contest” between the retail giants and the little
guys because the little guy so seldom wins or even gets to stay in business. From a competitive
standpoint, is such an outcome inevitable?

Discuss. Is it really the “big guys” driving the “little guys” out of business or is there something
more fundamental at work here?

 The "big guys “is not driving the "little guys" out of business and there is fundamental at here.
There are a lot of factor that a giant retailers being dominance from other retailer for example
physical store, a lot of consumer like to go shop when the physical store is spacious and offer
variety of product. Also the success of the business is based on how effective the business
model you create, many giants retailers has a competitive channel system which make them one
 step a-head from its competitors and a right strategic plan on how you will compete to your
competitor will be also a good factor. In conclusion, those so called big guys is has no fault for
having a big portion in the market compare to the small retailer because if those small retailer
improve their business model by building a good relation between manufacture and wholesalers
then there’s a possibility that they can reach the level of those big guys in the field of business.

Discussion Question #5

By 2009, social media services, such as Facebook and Twitter, had become a popular marketing
tool for small businesses. In fact, almost 25 percent of firms with fewer than 100 employees were using
social media for marketing purposes. This was more than double the percentage of the prior year. Many
of these firms cite the ease of use and low cost of these social media as the main reason for using them
for reaching out to and communicating with potential and existing customers.

How can the ability to communicate with customers via social media enhance channel
management? Discuss.

 The power of social media as a communication channel help business to expand their target
market by just a single advertisement in a certain social media like Facebook, hundreds or
thousands of user can be a possible customer. This is also an effective marketing tools
nowadays, it helps building a good relationship towards its customer. Social media also help to
open a new market that marketers grab this opportunity to market their product without
spending a lot of money in promoting/advertise their product than the traditional marketing use
TV , radio, magazines and newspapers which are more expensive than the digital marketing use
social media or websites. A marketers use social media not only because it low cost but its only
depend on how many users who use that certain social media, it will be an advantage if
marketers can market their product or service which there are a lot of active users. Overall, in
today’s generation the best marketing tool is the social media whenever a business is small or
big they chose to promote their businesses by means of social media and if you don’t use social
media to be recognized your business then it will be difficult to your business to be well-known.