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The Internet As A Channel

The Internet As A Channel






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    The Internet As A Channel The Internet As A Channel Presentation Transcript

    • The Internet as Channel MKT628 – Prof Viar
    • Channel as a Resource: Overview
      • What is a channel?
        • Purpose: to move stuff from supplier to buyer
        • Nature: interdependent firms as intermediaries
      • How is the Internet a channel?
        • Enables distribution
        • Enables and acts as intermediary
      • What are the effects of the Internet…
        • On channel characteristics?
        • As channel component, on mix elements?
        • Forms, flows, and functions
    • The Internet and Distribution: The Future Through the Past
      • Traditional forms of channel structure
        • Manufacturer-->Consumer
          • Ex.: Land’s End
        • Manufacturer-->Retailer-->Consumer
          • Ex.: anything you buy at WalMart
        • Manufacturer-->Wholesaler-->Consumer
          • Ex.: Sam’s Club
        • Man.-->Whole.-->Ret.-->Con.
          • Ex.: Grocery stores
          • + ancillary members…
    • Impact of the Internet: The Past, Present…
      • As the only channel member
        • Which companies can do this?
          • Depends on product type
            • E.g., digital are most direct
          • Depends on channel relationships
            • Producer and retailer (need strong producer)
            • Producer and consumer (nature of contacts )
        • Multi-channel strategies
      • As a channel component
        • Disintermediation (most hyped possibility)
        • Reintermediation (most likely possibility)
    • Characteristics of Disintermediation
      • Elimination of one or more middlemen
        • e.g., Direct sales by producer to buyer
        • Related factors
          • More effective when producer has more power
          • More effective when retailer-consumer relationships are less important
            • I.e., less specific market (commodities)
            • More for B2C than B2B? (lower asset specificity)
          • In toto , when barriers to entry are lower
      • Likely victims of disintermediation
    • Another Option: Reintermediation
      • Introduction of new middlemen
        • Infomediaries
        • Aka, “cybermediaries”
      • Characteristics of infomediaries
        • Constitute online brands (e.g., Travelocity)
        • Reflect new way to create relationships, matching products to buyers’ needs (e.g., CarPoint)
        • Occupy different niche in channel structures
          • From transferring product
          • To creating buyer/seller links
        • Function as service, not as product
          • For buyers and for sellers
    • Mix Implications of the Internet as a Channel Resource
      • Channel and Product
        • A digital bias?
        • Issues for determining product strategy
          • Digital form as replacement or complement?
          • Effects on product assortment (virtual aggregation)
            • Coordination benefits for inventory and warehouse costs
          • Effects on product development
            • Supply chain coordination
      • Channel and Price
        • Shifts to power structure
          • To buyer, given transparency
          • Disintermediation effects
          • Reintermediation effects
    • More Mix Implications
      • Channel and Place
        • Effects of the channel on the end of the channel
          • Online stores
            • Lower physical costs
            • Tax advantages
            • Virtual inventory advantages
          • The emergence of reverse netcentricity
          • Global distribution
      • Channel and Promotion
        • Information as what gets transferred
        • Global reach
          • Target appropriateness issues (channel affects content)
          • Channel as means for contact (personalization, customization)
    • Customer Acquisition Cost
    • Do You Have a Problem with This?
      • Issues for marketers: feasibility
        • Channel relationships
          • Power and conflict
          • Leveraged cooperation
      • Issues for consumers: availability
        • Real v. ephemeral benefits
        • Product availability (Toys-R-Us at Xmas…)
      • Issues for policymakers: liability
        • Illegal consumption (e.g., drugs and alcohol)
      • Issues for technology: stability
        • Reliability of channel delivery (e.g., hackers)
        • System/process development (e.g., extranets as Internet EDI)
      • Questions?