The environment of marketing

channels

Week2

Instructor: Jungwan Lee

 Learning objectives
• Understand the impact of environment in a
marketing channels context
• Delineate the major types of competition in
the context of marketing channel structure
and strategy
• Be alerted to rapid changes in technology
and how such changes can affect marketing
channels
 Marketing channel environment

• Economic environment
• Competitive environment
• Sociocultural environment
• Technological environment
• Legal environment
 The economic environment
• Recession
• Channel members-Substantial reductions in sales
volume and profitability
• Firms-heavy inventories
• Inflation=Consumer Price Index(CPI)
• Buy now before the price goes higher
• Hold on to your money
• Deflation
• Difficulties to pass cost induced price increases through
the channel
• Other economic issues
• Huge national debt, the trade deficit, the government
budget deficit
 The competitive Environment
• Types of competition
– Horizontal competition
– The same types of firms at the same channel
– Intertype competition
– Different types of firms at the same channel
– Vertical competition
– Channel members at the different levels
– Channel system competition
– Complete channel systems as units: corporate, contractual,
administered
• Competitive structure
– Ex) scrambled merchandising
 The sociocultural environment
• Age patterns of the population
– generation Y, N vs. Silver generation
• Changing ethnic mix
– Minority markets
• Educational trends
– Higher learning students (12 millions):information,
more services
• Family or household structure
– Smaller families, child-free couples, single
• Changing role of women
– 80%:30s~40s yrs career oriented women
 The technological environment
• The Internet and electronic marketing
channels
• Scanners, computerized inventory
management, and portable computers
– Universal product code (UPC)
• Electronic data interchange (EDI)
• Teleshopping, computershopping, and home
shopping : Net TV
• Other technological innovations
– Computer salespeople, strategic alliance
 The legal environment
• Legislation affecting marketing channels
• Legal issues in channel management
– Dual distribution: two different channels to his target market
– Exclusive dealing: only its products
– Full-line forcing:to carry a broad group of its full line products
– Price discrimination: books
– Price maintenance: supplier’s control the prices
– Resale restriction: to stipulate specific geographical market
territories
– Tying agreements: not to purchase that product from any other
supplier
– Vertical integration-”Lock up”: firm owns and operates all levels of
distribution channel.