Marketing Channel and Market Testing

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Marketing Channel

Marketing Channels -Structure & Functions

Segmentation Segmentation For For Marketing Channel Design

Market Testing

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Marketing Channel

Marketing channels are the routes to market used to sell every product and service that consumers and business buyers purchase everywhere in the world.

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Marketing Channel

Important of Studying Marketing Channels

Gatekeeper Important Asset of Marketing Strategy
# Differentiator #Difficult to replicate

End-User Satisfaction # Overall brand image Awareness of channel important is low # Opportunity for competitive advantage Difficult to create and maintain channel

#Difficult and costly to change #Right the first time

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Marketing Channel

What is a Marketing Channels?

Set of Interdependent Organizations.

A Process (usually over time) Process with purpose - to satisfy end-users

A marketing channel is a set of interdependent organizations involved in the process of making a product or service available for use or consumption.

The marketing channel is often viewed as a key strategic asset of a manufacturer

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Marketing Channel

Two forces for channel development and and change Demand-Side Factors

Why Do Marketing Channels Exist and Change?

Facilitation of Search

Intermediary channels arise because buyers and sellers cannot find each other

Adjustment of Assortment Discrepancy

Manufacturer = large quality of limited variety Consumers = large variety in small quantities (customization & choice) 1. Sorting out (packer : orange size and grade) 2. Accumulation (wholesaler : gather together supply) 3. Allocation (wholesale distributor : breaking bulk) 4. Assorting (complementary
Bottom Line : Meeting customer demands, driven by the consumer. Marketing Channel Here comes your footer

Channel Development & Change

Supply-Side Factors

Routinization of transactions

Electronic Data Interchange ; Continuous replenishment program (CRP)

Reduction in number of contacts

Employing more and more intermediaries is subject to diminishing returns simply from the point of view of number and cost of contacts in the market

Manufactur ers

Manufactur ers Wholesaler

Retailer

Retailer

Bottom Line : mitigating risk, minimizing management costs, maximizing utility Here comes your footer Marketing Channel

What is The Work of The Marketing Channel?

Marketing Flows in Channels
Producers
Physical Ownership Promotion

Wholesalers

Physical Ownership Promotion

Retailers

Physical Ownership Promotion

Consumers: Industrial and Household

Negotiation Financing

Negotiation Financing

Negotiation Financing

Risking Ordering Payment

Risking Ordering Payment

Risking Ordering Payment

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Marketing Channel

Marketing Flows

Processes flow through the channel Done at different points in time by different channel members Flow of information The eight universal marketing channel flows : 1. Physical possession 2. Ownership 3. Promotion 4. Negotiation 5. Financing 6. Risking 7. Ordering 8. Payment

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Marketing Channel

Who Belongs To A Marketing Channel?

Channel Members

Manufacturers Intermediaries (retailers, wholesalers) End-users

Channel Captain :
An organization that taks the keenest interest in the workings of this product or service and that act as a prime mover in establishing and maintaining channel links.

Channel format as Combination of Channel Members

The various channel participants can combine in many ways to create effective marketing channels. The range and number of channel members are affected by the nature of demand by end-users, and the captaincy of the channel can vary from situation to situation.

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Marketing Channel

Channel Analysis Framework CHANNEL DESIGN PROCESS : # Segmentation

Recognize and Respond to target customers service output demands Decisions about Efficient Channel Response :

CHANNEL IMPLEMENTATION Channel Power: PROCESS : Channel Identify sources

for all channel members

Conflict: Identify actual and potential source

#Channel Structure :

What kind of intermediaries are in my channel? ; Who are they? ; How many of them? # Splitting the workload With what responsibilities? # Degree of commitment: Distribution alliance? Vertical integration / ownership? # Gap analysis What do i have to change?

Manage/ Defuse Conflict : Use power source strategically, subject to legal constraints

Goal : Channel Coordination

Insight for specific channel institutions : Retailing, Here comes your footer Wholesaling and Logistics, Franchising

Segmentation

Splitting market into groups of end-users

Similar within groups Different between groups Based on demands for the outputs of the marketing channel Added value Service outputs

Example : Segments of book end-users

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Marketing Channel

Channel Structure
1. 2. 3.

Types of channel members Identities of specific channel members Channel intensity : number of each type

Splitting the Workload

Assign channel flows to channel members Meet target segments service output demands Reliable Minimize total cost, while meeting service level

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Marketing Channel

Degree of Commitment
Transactional relationships - Pursue individual goals - No guarantee of continued business Alliances - Enduring connections throughout companies - Pursue common goals Vertical integration - Own channel members - Reasons - Channel members do not exist - Company can handle flows as efficiently - Channel member is not sufficiently committed

Gap Analysis

The difference between optimal and actual channels Demand side gaps - Service output demands are not being met - Undersupplied - Oversupplied Supply side gaps - At least one flow is costing too much - Lack of expertise - Waste Closing gaps is difficult and costly

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Marketing Channel

Channel Power
Ability to control other channel members Necessary to implement channel design May be used to optimize channel to benefit of all channel members May be used to achieve own ends without regard to other channel members

Channel Conflict
Actions of channel members prevent channel from achieving its goals Goal conflict Domain conflict Perceptual conflict

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Marketing Channel

Manage/ Difuse Conflict

Identify sources of conflict - Poor channel design - Poor performance Take action - Exercise channel power

Channel Coordination
Result of - Channel designed to meet service output demands of target end-user segments - Application of channel power to ensure smooth implementation of the channel design Ongoing process

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Marketing Channel