15

Designing and Managing Integrated

Marketing Channels

Marketing Management, 13th ed

Philips Emphasizes Value Delivery

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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.

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 Channels and
Marketing Decisions
A push strategy uses the manufacturers sales
force, trade promotion money, and other means
to induce intermediaries to carry, promote, and
sell the product to end users.
A pull strategy uses advertising, promotion, and
other forms of communication to persuade
consumers to demand the product from
intermediaries.

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Categories of Buyers

Habitual shoppers

High value deal seekers

Variety-loving shoppers

High-involvement shoppers

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 Types of Shoppers
Service/quality customers
Price/value customers
Affinity customers
 Channel Member Functions
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

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Figure 15.2 Marketing Channel Flows

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 Figure 15.3
Consumer Marketing Channels

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 Figure 15.3
Industrial Marketing Channels

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 Designing a
Marketing Channel System
Analyze customer needs

Establish channel objectives

Identify major channel alternatives

Evaluate major channel alternatives

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 Channel Service Outputs

Lot size

Waiting/delivery time

Spatial convenience (easy for customers to

purchase product)

Product variety
Service backup
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 Establishing objectives and
constraints
Marketers should state their channel
objectives in terms of service output level and
associated cost and support level.

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 Identifying Channel Alternatives

Types of
intermediaries
Number of
intermediaries
Terms and
responsibilities
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Number of Intermediaries

Exclusive

Selective

Intensive

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 Terms and Responsibilities
of Channel Members

Price policy
Condition of sale
Distributors territorial rights
Mutual services and responsibilities

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 Evaluating major channel
alternatives
Each channel alternative needs to be
evaluated against economic, control and
adaptive criteria.

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Figure 15.4 The Value-Adds vs. Costs of Different
Channels

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Figure 15.5 Break-Even Chart for the Choice
Between a Company Sales Force and
Manufacturers Sales Agency

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Channel-Management Decisions

Selecting channel members

Training channel members

Motivating channel members

Evaluating channel members

Modifying channel members

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 Channel Power

Coercive
Reward
Legitimate
Expert
Referent

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Channel Integration and Systems

Vertical marketing
systems
Corporate VMS
Administered VMS
Contractual VMS
Horizontal marketing
systems
Multichannel systems

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 What is Channel Conflict?
Channel conflict occurs when one members
actions prevent another channel from
achieving its goal.
Types of channel conflict
Vertical
Horizontal
Multichannel

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 Causes of Channel Conflict

Goal incompatibility (profit and penetration).

Unclear roles and rights

Differences in perception

Intermediaries dependence
on the manufacturer
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 Table 15.3 Strategies for Managing Channel
Conflict
Adoption of Cooptation
superordinate goals Diplomacy
Exchange of employees Mediation
Joint membership in Arbitration
trade associations Legal recourse
(retailer association)

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e-Commerce Marketing Practices

Pure-click
Brick-and-click

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