Transcript Chapter 15

Chapter 15
Electronic Marketing Channels
Objective 1:
Electronic Marketing
Channels
Computers
Technology
Internet
Impact on
Design & Management of Marketing Channels
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Objectives 2 & 3:
Electronic Marketing
Channels
Not physical availability
Web-TV, PDAs
The use of the Internet to make products & services
available so that the target market with access to
computers or other enabling technologies can shop
& complete the transaction for purchase via
interactive electronic means
Actually purchasing products through the use
of PCs, Web-TV, PDAs
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Structure of Electronic
Marketing Channels
1. Disintermediation versus
reintermediation
Three
Key
Phenomena
2. Information flow versus
product flow
3. Virtual channel structure versus
physical channel structure
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Objective 4:
Disintermediation and
Reintermediation
Disintermediation
Intermediaries become
superfluous because producers
gain exposure to vast numbers
of customers in cyberspace
Dell
Computer Corp.
Reintermediation
Shifting, changing, or adding
middlemen to the channel
Amazon.com
Auto-By-Tel Corp.
Peapod, Inc.
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Disintermediation versus
Reintermediation
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No matter how
technologically
sophisticated the
Internet becomes or
how much it is hyped,
the laws of economics
as they relate to
channel structure do not
change.
Efficiency in the
performance of
distribution tasks is what
ultimately determines
what form channel
structure will take.
=
The Internet has not eliminated middlemen,
or caused total disintermediation.
Objective 5:
Internet Limits
Product Flow
• Cannot be digitized
• Processed slowly, often by people
• Is basis for all other flows—negotiation,
ownership, information, &
promotion
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Objective 6:
Developments & Trends
• Online shopping
to $36 billion from
mid-1990s to the end of 2002
Electronic
Marketing
Channels
• Online shopping has become a routine
shopping choice
• PCs, peripherals, software, & books
accounted for a significant
portion of total retail spending on
these products
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Profile of Online Shoppers
• Age range of 25 to 54
• Income level range $35,000 to
about $99,999
Highest
Percentages
• College graduates & those with
postgraduate education
make up 54%
• Professional/managerial
occupations make up 32%
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Future of Online Shopping
Online Sales as a Percentage of Total Retail Sales,
1999–2002
Year
% Change from
Previous Year
1999
Online as % of
Retail Sales
0.700
2000
0.925
32.1
2001
1.125
21.6
2002
1.300
19.7
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Objective 7:
Advantages & Disadvantages
Advantages of
Electronic
Marketing Channels
1.
2.
3.
4.
5.
Global scope & reach
Convenience/rapid transaction processing
Information processing efficiency & flexibility
Data-based management & relationship capabilities
Lower sales & distribution costs
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Advantages & Disadvantages
Disadvantages of
Electronic
Marketing Channels
1. Lack of contact with actual products & delayed
possession
2. Fulfillment logistics not at Internet speed or efficiency
3. Clutter, confusion, & cumbersomeness of Internet
4. Nonpurchase motives for shopping not addressed
5. Security concerns of customers
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Objective 8:
Implications
• Objectives & strategies of the firm & electronic
marketing channels
• Role of electronic marketing channels in the
marketing mix
• Channel design & electronic marketing channels
• Channel member selection & electronic marketing
channels
• Channel management & electronic marketing
channels
• Evaluation & electronic marketing channels
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Objectives & Strategies of the Firm
Role of distribution more complex because
of electronic marketing channels
=
Channel manager must consider whether
Internet-based channels fundamentally affect
the firm’s decision about the priority
given to distribution
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The Marketing Mix
The Internet arms large numbers of customers with
more information about products & services
to level the playing field
The fourth P, place (distribution), may assume a
larger role relative to the other three variables for
more & more firms
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Channel Design
The channel manager of retailers, industrial, and B2B
markets should provide “channel-surfing” consumers
with whatever channels or combinations of channels
they desire
=
A facet of the development of an
effective multichannel marketing strategy
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Channel Member Selection
Complexity grows as channel member selection may
include the need to avoid conflict with conventional
channel members
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The need to select members carefully
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Channel Management
Multichannel challenge of conventional and
electronic channels
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The fundamental issues of motivating channel members,
building cooperation, managing conflict, &
coordinating elements of the marketing mix requires
manager’s full attention
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Evaluation
Likely to change
Specific criteria for
performing evaluations &
technological means for
doing so
Unlikely to change
Performance expectations,
criteria, & measurement of
how well they are being met
by channel members
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