Marketing channel strategy


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Marketing channel strategy

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Marketing channel strategy

  1. 1. Chapter 7 Marketing Channel Strategy and Management
  2. 2. The Channel Selection Decision Fundamental Questions <ul><li>Who are potential customers ? </li></ul><ul><li>Where do they buy ? </li></ul><ul><li>When do they buy ? </li></ul><ul><li>How do they buy ? </li></ul><ul><li>What do they buy ? </li></ul>
  3. 3. Marketing Channel Alternatives Producer Ultimate Buyers Brokers or Agents Distributors or Wholesalers Retailers or Dealers
  4. 4. Direct versus Indirect Distribution <ul><li>Direct - using firm’s own distribution, usually used when: </li></ul><ul><li>intermediaries are not available or are not capable of satisfying target market needs </li></ul><ul><li>target markets are easily identifiable </li></ul><ul><li>personal selling is an important communication tool for the company </li></ul><ul><li>the company has a wide variety of offerings for the target market </li></ul><ul><li>organizational resources are available </li></ul>
  5. 5. <ul><li>Indirect - using intermediaries </li></ul><ul><li>type, location, density and number of channels must be determined </li></ul><ul><li>can sometimes perform distribution activities more efficiently and less expensively </li></ul>Direct versus Indirect Distribution
  6. 6. Electronic Marketing Channels <ul><li>...use the Internet to make goods and services available to consumers </li></ul><ul><li>Disintermediation -- elimination of traditional intermediaries and direct distribution through electronic marketing channels </li></ul>
  7. 7. Ultimate Buyers Representative Electronic Marketing Channels Book Publisher Book Wholesaler (Virtual Retailer) Dell Computer Airline Travelocity (Virtual Agent)
  8. 8. Channel Selection at the Retail Level <ul><li>Type and place decisions depend on the buying requirements of the target market and the potential profitability of the outlets </li></ul><ul><li>Number of intermediaries carrying the firm’s offering in a geographic area or density also needs to be determined </li></ul>
  9. 9. Exclusive Intensive Selective Extent of Distribution Coverage Wrigley’s Coke Levi’s Sony Lexus Rolex
  10. 10. Dual Distribution <ul><li>occurs when an organization distributes its offering through 2 or more different marketing channels that may or may not compete for similar buyers </li></ul><ul><li>the main consideration is whether it will provide incremental sales revenue or cannibalize existing sales </li></ul>
  11. 11. Intermediary Requirements <ul><li>Intermediaries </li></ul><ul><ul><li>are concerned with the adequacy of the offering </li></ul></ul><ul><ul><li>require marketing support </li></ul></ul><ul><ul><li>seek a degree of exclusivity </li></ul></ul><ul><ul><li>expect a profit margin consistent with the functions they are expected to perform </li></ul></ul>
  12. 12. Trade Relations <ul><li>Channel Conflict </li></ul><ul><li>Sources of Channel Conflict : </li></ul><ul><ul><li>when one channel member bypasses another </li></ul></ul><ul><ul><li>over how profit margins are distributed </li></ul></ul><ul><ul><li>when manufacturers believe that retailers or wholesalers are not giving their products enough attention </li></ul></ul><ul><ul><li>dual distribution </li></ul></ul>
  13. 13. Channel-Modification Decisions <ul><li>Reasons: </li></ul><ul><li>shifts in geographical concentration of buyers </li></ul><ul><li>inability of existing intermediaries to meet the needs of buyers </li></ul><ul><li>costs of distribution </li></ul>
  14. 14. Factors in Modification Decisions <ul><li>Will the change improve the effective coverage of the sought target markets? </li></ul><ul><li>Will the change improve customer satisfaction? </li></ul><ul><li>Which marketing functions must be absorbed? </li></ul><ul><li>Does the organization have the resources to perform the new functions? </li></ul><ul><li>What will be the effect on other channel members? </li></ul><ul><li>What will be the effect on long-term organizational objectives? </li></ul>