Transcript Part 1
Part 4 Additional Perspectives on Marketing Channels Chapter 15 Electronic Marketing Channels Objective 1: Electronic Marketing Channels Computers Technology Internet Impact on Design & Management of Marketing Channels 15 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 15 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 15 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. 15 Disintermediation versus Reintermediation 15 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 15 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 15 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% 15 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 15 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 15 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 15 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 15 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 15 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 15 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 15 Channel Member Selection Complexity grows as channel member selection may include the need to avoid conflict with conventional channel members = The need to select members carefully 15 Channel Management Multichannel challenge of conventional and electronic channels = The fundamental issues of motivating channel members, building cooperation, managing conflict, & coordinating elements of the marketing mix requires manager’s full attention 15 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 15