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Part 6 Delivering Value

1 15
Designing and
Managing
Integrated Marketing
Channels
 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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 Intermediaries

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 Channels and
Marketing Decisions
 A push strategy uses the manufacturer’s
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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 REI Employs Hybrid Channels

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 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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 Marketing Flows
in the Marketing Channel
for Forklift Trucks

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 Marketing Channel Levels

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 Consumer Markets

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 Industrial Markets

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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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 Service Outputs of Channels

Lot size

Waiting and delivery time

Spatial convenience

Product variety

Service backup

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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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 The Value-Adds versus
Costs of Different Channels

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 Break-Even Cost Chart

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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  Horizontal

systems marketing systems
 Corporate VMS  Multichannel
 Administered VMS systems
 Contractual VMS

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 Integrated Marketing Channel
System

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 Channel Conflict

 What types of conflict arise in channels?

 What causes conflict?
 What can marketers do to resolve it?

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 Causes of Channel Conflict

 Goal incompatibility
 Unclear roles and rights
 Differences in perception
 Intermediaries’ dependence on manufacturer

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 Strategies for Managing Channel
Conflict
 Strategic  Cooptation
justification  Diplomacy
 Dual compensation  Mediation
 Superordinate goals  Arbitration
 Employee exchange  Legal recourse
 Joint memberships

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 E-Commerce

Pure-click

Brick-and-click

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 M-Commerce

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1
16
Managing Retailing,
Wholesaling,
and Logistics
 Retailing

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 Major Retailer Types

 Specialty store  Discount store

 Department store  Off-price retailer
 Supermarket  Superstore
 Convenience store  Catalog showroom

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 Levels of Retail Service

 Self service
 Self selection
 Limited service
 Full service

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 Nonstore Retailing

 Direct selling
 Direct marketing
 Automatic vending
 Buying service

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 Major Types of Corporate
Retail Organizations
 Corporate chain store
 Voluntary chain
 Retailer cooperative
 Consumer cooperative
 Franchise organization
 Merchandising conglomerate

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 Franchising System

 The franchisor owns a trade or service mark

and licenses it to franchisees in return for
royalty payments
 The franchisee pays for the right to be part of
the system
 The franchisor provides its franchisees with a
system for doing business

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 Changes in the
Retail Environment
 New retail forms and combinations
 Competition between store-based and non-
store-based retailing
 Growth of giant retailers
 Decline of middle market retailers
 Growing investment in technology
 Global profile of major retailers
 Growth of shopper marketing

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 Retailers’ Marketing Decisions

 Target market  Store atmosphere

 Product assortment  Store activities
 Procurement  Store experiences
 Prices  Communications
 Services  Location

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 Retailer Services Mix

 Prepurchase services
 Postpurchase services
 Ancillary services

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 Store Atmosphere
and Experiences

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 Tips for Increasing Sales
in Retail Space
 Keep shoppers in the store
 Honor the transition zone
 Don’t make them hunt
 Make merchandise available to the reach and
touch
 Note that men do not ask questions
 Remember women need space
 Make checkout easy

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 Location Decision

 Central business districts

 Regional shopping centers
 Community shopping centers
 Shopping strips
 Location within a larger store

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 Private Label Brands

 Private labels are ubiquitous

 Consumer accepts private labels
 Private-label buyers come from all
socioeconomic strata
 Private labels are not a recessionary
phenomenon
 Consumer loyalty shifts from manufacturers to
retailers

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 Wholesaling Functions

 Selling and  Transportation

promoting  Financing
 Buying and  Risk bearing
assortment building
 Market information
 Bulk breaking
 Management
 Warehousing services and
counseling

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 Supply Chain Management

Supply chain management starts before

physical distribution and means strategically
procuring the right inputs (raw materials,
components, and capital equipment);
converting them efficiently into finished
products; and dispatching them to the final
destinations.

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 Market Logistics Planning

 Deciding on the company’s value proposition

to its customers
 Deciding on the best channel design and
network strategy
 Developing operational excellence
 Implementing the solution

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 What are
Integrated Logistics Systems?

An integrated logistics system (ILS)

includes materials management, material
flow systems, and physical distribution,
aided by information technology.

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 Market Logistics

 Sales forecasting  In-plant

 Distribution warehousing
scheduling  Shipping-room
 Production plans processing
 Finished-goods  Outbound
inventory decisions transportation
 Packaging  Field warehousing
 Customer delivery
and servicing

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 Market Logistics Decisions

 How should orders be handled?

 Where should stock be located?
 How much stock should be held?
 How should goods be shipped?

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