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Marketing channel strategy

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Marketing channel strategy

Marketing channel strategy


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

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