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A Management View
8e
Rosenbloom
1
CHAPTER
Marketing Channel
Concepts
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① The growing importance of marketing channels
② The definition of marketing channels
Learning Objectives
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Objective
Why the growing importance of
1 marketing channels?
1 The explosion of information technology
and E-commerce
2 A greater difficulty in gaining a sustainable
competitive advantage
3 The growing power of distributors,
especially retailers in marketing channels
4 The need to reduce distribution costs
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1 The explosion of information technology and E-
commerce
2 A greater difficulty in gaining a sustainable competitive advantage
3 The growing power of distributors, especially retailers in marketing
channels
4 The need to reduce distribution costs
The prediction:
Disintermediation – reduction
of number of intermediaries Yahoo!
eBay
The reality: Amazon.com
Reintermediation – evolution
of a new type of intermediary
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1 The explosion of information technology and E-commerce
2 A greater difficulty in gaining a sustainable
competitive advantage
3 The growing power of distributors, especially retailers in marketing
channels
4 The need to reduce distribution costs
Place (distribution), or
Marketing Channel
Sustainable Strategy
competitive
advantage
Potential for gaining
competitive advantage
because place is more
difficult for competitors
to copy
5
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1 The explosion of information technology and E-commerce
2 A greater difficulty in gaining a sustainable competitive advantage
3 The growing power of distributors, especially
retailers in marketing channels
4 The need to reduce distribution costs
©2013
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1 The explosion of information technology and E-commerce
2 A greater difficulty in gaining a sustainable competitive advantage
3 The growing power of distributors, especially retailers in marketing
channels
4 The need to reduce distribution costs
The focus is on
channel structure and
management.
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Objective
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What is a channel manager?
Anyone in a firm or
organization who is
involved in marketing
channel decision making
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Objective How does marketing channel strategy
3 relate to the
rest of the marketing mix?
Marketing
Mix
or Challenges
the four Ps
Product Limited ability to gain and hold competitive
advantage
Price Price wars erode profitability & provide unstable
basis for sustaining competitive advantage
Promotion Expensive and short-lived
Place Marketing channels support & enhance other Ps
(Distribution) to meet demands of target markets
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The change of focus to
channel strategy
11
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Channel Strategy and Logistics
Management
Product Flow
Negotiation Flow
Ownership Flow
Information Flow
Promotion Flow
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Product Flow
Manufacturer
Transportation
Company
Wholesalers
Retailers
Consumer
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Negotiation Flow
Manufacturer
Wholesalers
Retailers
Consumer
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Ownership Flow
Manufacturer
Wholesalers
Retailers
Consumer
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Information Flow
Manufacturer
Transportation
Company
Wholesalers
Retailers
Consumer
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Promotion Flow
Manufacturer
Advertising
Agency
Wholesalers
Retailers
Consumer
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Objective
Contactual Efficiency
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Specialization & Division of Labor
Distributed Distributed
Inter-organizationally intraorganizationally
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Contactual Efficiency
Granada Guitar Co.
Negotiation Estimated Dollar Distribution Contactual
Effort Costs of Inputs Objective Efficiency
(Output)
100 sales visits @ $50 = $5,000 Get 500 Negotiation
100 phone calls @ 3 = 300 music effort in
20 magazine @1,000 = 20,000 stores to dollar terms
carry new relative to
ads $25,300
guitar line achieving
the
distribution
objective =
$25,300
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Objective
Channel Structure v. Ancillary
6 Structure
Channel Structure
Why are single-
channel
The group of channel members to
structures currently
which a
the exception?
set of distribution tasks has been
allocated
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Discussion Question #1
ROCKAUTO.COM is a leading online auto parts store
that prides itself for offering a huge selection of auto
parts, everyday low prices, fast shipping, and an easy-to-
use Web site. Some ROCKAUTO.COM advertisements have
even claimed that this online auto parts store is “head and
shoulders” above any brick and mortar auto parts store.
The company’s slogan, “All The Parts Your Car Will Ever
Need,” suggests that customers have all the choice they
could possibly want from ROCKAUTO.COM and that they
need look no further than this online auto parts store to
satisfy all their needs.
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Discussion Question #5
One of the major themes presented in this chapter is the need for
choice as to how products and services are made available to
customers. Thus, multi-channel strategies that provide a wide range of
channels including an Internet based online channel option have
become imperative. Yet there are very successful firms that take a
virtually opposite view by purposely limiting choice. A case in point is
Edward Jones, a financial services company with the largest network of
brokerage offices in the U.S.—more than 10,000 and still growing.
Edward Jones has a Web site that its customers can visit but it does not
offer its customers the option of trading online. Instead, all transactions
must take place
through an Edward Jones broker. Even with this single channel strategy,
the company is still growing and is very profitable.
Why do you think Edward Jones has been able to “buck the trend”
toward multi-channel strategy that would include an online channel as
a key option?
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