Transcript Designing and Managing Integrated Marketing Channels

Designing and
Managing Integrated
Marketing Channels
Key Concepts
Marketing Management at Royal Philips
Electronics
One of the world’s
biggest electronics
companies and
Europe’s largest, with
sales of over $36
billion.
Secret of RPE’s success is
Distribution
Marketing Channels and Value Networks
• Marketing channels—sets of interdependent
organizations involved in the process of making
a product or service available for use or
consumption.
• Value network—a system of partnerships and
alliances that a firm creates to source, augment,
and deliver its offerings.
Push and Pull Strategies
Push
Sales force and trade
promotion
Pull
Advertising and
promotion
Marketing Flows
Commonalities Among All Channel
Functions
• They use up scarce resources
• They can often be performed better through
specialization
• They can be shifted among channel members
Consumer and Industrial Marketing
Channels
Channel-Design Decisions
• Analyze customers’ desired service output
levels
• Establish objectives and constraints
• Identify major channel alternatives
• Evaluate the major alternatives
Analyzing Customers’ Desired Service
Output Levels
Lot size
Waiting and
delivery time
Product variety
Spatial
convenience
Service backup
Establishing Objectives and
Constraints
• State channel objectives in terms of targeted
service output levels.
• Objectives vary with product characteristics.
• Environmental factors:
• Competitors’ channels
• Economic conditions
• Legal regulations and restrictions
Identifying Major Channel
Alternatives
• Types of
intermediaries
• Merchants
• Facilitators
• Number of
intermediaries
• Exclusive
• Selective
• Intensive
• Terms and
responsibilities of
channel members
• Price policy
• Conditions of sale
• Distributors’ territorial
rights
• Mutual services and
responsibilities
Evaluating the Major
Alternatives
Determine whether
own sales force or a
sales agency will
produce more sales.
Estimate the costs of
selling different
volumes through each
channel.
The Value-Adds vs. Costs of Different
Channels
Channel-Management
Decisions
• Selecting channel members
• Training and motivating channel members
• Evaluating channel members
• Modifying channel arrangements
Channel Integration and Systems
Vertical marketing
system
Horizontal marketing
system
Multichannel
marketing systems
Vertical Marketing Systems (VMS)
Corporate VMS
Administered VMS
Contractual VMS
Contractual VMSs
Wholesaler-sponsored
voluntary chains
Retailer cooperatives
Franchise organizations
Horizontal Marketing
Systems
Two or more unrelated companies
put together resources or
programs to exploit an emerging
marketing opportunity.
Integrated Multichannel Marketing
Systems
Multichannel marketing
Occurs when a single firm
uses two or more
marketing channels to
reach one or more
customer segments.
Integrated marketing
channel system
Strategies and tactics of
selling through one channel
reflect the strategies and
tactics of selling through
other channels.
Conflict and Cooperation
Channel conflict
Generated when one channel
member’s actions prevent
another channel member from
achieving its goals.
Channel coordination
Channel members are
brought together to
advance the goals of the
channel.
Types of Conflict
Vertical
Multichannel
Causes of Channel
Conflict
Goal incompatibility
Unclear roles and rights
Differences in
perception
Dependence
Strategies for Managing Channel
Conflict
• Adoption of superordinate goals
• Exchange of employees
• Joint membership in trade associations
• Co-optation
• Diplomacy, mediation, or arbitration
• Legal recourse
Legal and Ethical Issues in Channel
Relations
Exclusive dealing
Exclusive territories
Tying agreements
Dealers’ rights
.
Impact of Internet on Marketing
Practices
E-business
E-commerce
E-purchasing
E-marketing
Breakthrough Marketing: Amazon
Started as a
bookseller,
now a $10
billion
company!
Pure-Click Companies
• Search engines
• Internet service providers (ISPs)
• Commerce sites
• Transaction sites
• Content sites
• Enabler sites
Internet Sources of
Information
Supplier Web sites
Infomediaries
Market makers
Consumer communities
Brick-and-Click
Companies
• Strategies for gaining acceptance from
intermediaries when selling through
intermediaries and online:
• Offer different brands or products on the
Internet.
• Offer offline partners higher commissions to
cushion the negative impact on sales.
• Take orders on the Web site but have retailers
deliver and collect payment.
Why E-Commerce
Succeeds
Convenience – 24/7
Ease of use
Trust
Availability