CHAPTER 15:DESIGNING AND MANAGING INTEGRATED        MARKETING CHANNELS                 GROUP # 4       CRISOSTOMO, KATHLEE...
Crisostomo, Kathleen Lizette C.MARKMACHAPTER 15:DESIGNING AND MANAGINGINTEGRATED MARKETING CHANNELS
Top 10 Concepts1. Marketing Channel System: Push and Pull2. Categories of Buyers3. Decisions in Designing a Marketing Chan...
Top 10 Concepts1. Marketing Channel System: Push and Pull2. Categories of Buyers3. Decisions in Designing a Marketing Chan...
• Push strategy uses the manufacturer’s sales  force, trade promotion money, and other means  to induce intermediaries to ...
• A pull strategy uses advertising, promotion, and  other forms of communication to persuade  consumers to demand the prod...
Top 10 Concepts1. Marketing Channel System: Push and Pull2. Categories of Buyers3. Decisions in Designing a Marketing Chan...
Categories of Buyers• Habitual Buyers  • Same place, same manner• High value deal seekers  • They know what they need and ...
Categories of Buyers• Variety-loving shoppers   • Gather info through various channels,     take advantage of high-touch s...
Top 10 Concepts1. Marketing Channel System: Push and Pull2. Categories of Buyers3. Decisions in Designing a Marketing Chan...
Decisions in Designing a         Marketing Channel SystemA. Analyze customer needs* Greater service = greater channel cost...
Decisions in Designing a         Marketing Channel SystemA. Analyze customer needs* Greater service = greater channel cost...
Decisions in Designing a         Marketing Channel SystemA. Analyze customer needs* Greater service = greater channel cost...
Decisions in Designing a         Marketing Channel SystemA. Analyze customer needs* Greater service = greater channel cost...
Top 10 Concepts1. Marketing Channel System: Push and Pull2. Categories of Buyers3. Decisions in Designing a Marketing Chan...
Analyzing customer needs:     Channel Service Outputs– Lot size: How many can be purchased on 1  occasion?                ...
Analyzing customer needs:     Channel Service Outputs– Lot size: How many can be purchased on 1  occasion?– Waiting and de...
Analyzing customer needs:     Channel Service Outputs– Lot size: How many can be purchased on 1  occasion?– Waiting and de...
Analyzing customer needs:     Channel Service Outputs– Product variety: more choices = more  chances of finding what is ne...
Analyzing customer needs:     Channel Service Outputs– Service back-up: add-ons
Top 10 Concepts1. Marketing Channel System: Push and Pull2. Categories of Buyers3. Decisions in Designing a Marketing Chan...
Identifying Channel Alternatives:          Three Elements         1. Types of intermediaries• Do I need a wholesaler? Reta...
Identifying Channel Alternatives:           Three Elements          1. Types of intermediaries * Do I need a wholesaler? R...
Identifying Channel Alternatives:           Three Elements          1. Types of intermediaries * Do I need a wholesaler? R...
Top 10 Concepts1. Marketing Channel System: Push and Pull2. Categories of Buyers3. Decisions in Designing a Marketing Chan...
Channel-Management Decisions          Because to the customers, the channels are Select   the company!
Channel-Management Decisions           Because to the customers, the channels are Select    the company! Train           B...
Channel-Management Decisions           Because to the customers, the channels are Select    the company! Train           B...
Top 10 Concepts1. Marketing Channel System: Push and Pull2. Categories of Buyers3. Decisions in Designing a Marketing Chan...
• Channel Power is the ability to  alter channel’s behavior• Cooperation is a huge challenge!
Channel Powera. Coercive power- Withdraw resource or terminate relationshipb. Reward power- Extra benefit for performancec...
Top 10 Concepts1. Marketing Channel System: Push and Pull2. Categories of Buyers3. Decisions in Designing a Marketing Chan...
Channel Integration and SystemsVertical Marketing Systems                  -Producer + Wholesaler + Retailer              ...
Channel Integration and SystemsVertical Marketing Systems      Horizontal             - 2 or more unrelated   Marketing Sy...
Channel Integration and SystemsVertical Marketing Systems                             - More marketing                    ...
Top 10 Concepts1. Marketing Channel System: Push and Pull2. Categories of Buyers3. Decisions in Designing a Marketing Chan...
• Channel Coordination – channel  members are brought together to  advance the goals of the channel
• Channel conflict - one member’s  actions prevent another channel  from achieving its goal* Can be vertical, horizontal o...
Top 10 Concepts1. Marketing Channel System: Push and Pull2. Categories of Buyers3. Decisions in Designing a Marketing Chan...
* Online retailers provide convenient,  informative and personalized experiences  without:     • Retail floor space     • ...
E-Commerce Marketing PracticesPure-click             Launched a website without any previous             experience as a f...
E-Commerce Marketing Practices Pure-click               Launched a website without any previous               experience a...
Designing and Managing Integrated       Marketing Channels           Galicano Siton           Markma – v57
What is a Marketing Channel?                          A marketing channel              Producer   Agent                  s...
Channels and                  Marketing Decisions                 Producer                                               A...
Channels and           Marketing DecisionsA pull strategy uses             Advertiseadvertising,                     Deman...
Buyer Expectations for              Channel Integration                                   •   Ability to order a product  ...
Category and Types of Buyers     Habitual                  Quality      Buyers                               Service    Hi...
Channel Member FunctionsGather Information• Develop and disseminate persuasive communication     Reach Agreement on price ...
Designing aMarketing Channel System     Analyze       Establish    customer       channel      needs       objectives     ...
Channel Service Outputs                    Lot size                               Waiting/deliveryService backup          ...
Identifying Channel Alternatives• Types of intermediaries• Number of intermediaries• Terms and responsibilities
Number of Intermediaries• Exclusive• Selective• Intensive
Terms and Responsibilities              of Channel Members•   Price policy•   Condition of sale•   Distributors’ territori...
Channel-Management Decisions                 Select  Modify                         Train      Evaluate            Motivate
Channel Power•   Coercive•   Reward•   Legitimate•   Expert•   Referent
Channel Integration and SystemsVertical marketing systems• Corporate VMS• Administered VMS• Contractual VMSHorizontal ma...
What is Channel Conflict?• Channel conflict occurs when one member’s  actions prevent another channel from  achieving its ...
Causes of Channel Conflict•   Goal incompatibility•   Unclear roles and rights•   Differences in perception•   Intermediar...
Table 15.3 Strategies for Managing Channel                    Conflict• Adoption of             •   Cooptation  superordin...
Designing & Managing Integrated Marketing               Channels              Kristoffer Z. Jongco             Marketing M...
Outline:1.   Defining Marketing Channels2.   Importance of Marketing Channels3.   Understand Customer Needs4.   Role of Ma...
Outline:7. Identify & Evaluate Major Channel Alternatives8. Channel Management Decisions9. Channel Integration & Systems10...
Designing and Managing Integrated        Marketing Channels     (10 Things to Remember)          www.kristofjongco.blogspo...
Outline:1.   Defining Marketing Channels2.   Importance of Marketing Channels3.   Understand Customer Needs4.   Role of Ma...
1. Marketing ChannelsMeans by which firms attempt to inform, persuade, and remind consumers,      directly or indirectly, ...
Outline:1.   Defining Marketing Channels2.   Importance of Marketing Channels3.   Understand Customer Needs4.   Role of Ma...
2. Importance of Marketing ChannelsNew Ideas            Increase Profits            www.kristofjongco.blogspot.com
Outline:1.   Defining Marketing Channels2.   Importance of Marketing Channels3.   Understand Customer Needs4.   Role of Ma...
3. Understand Customer NeedsCustomers           Product/Services                    www.kristofjongco.blogspot.com
Outline:1.   Defining Marketing Channels2.   Importance of Marketing Channels3.   Understand Customer Needs4.   Role of Ma...
4.Role of Marketing Channels               0 Level               1 Level               2 LevelManufacturer   3 Level      ...
Outline:1.   Defining Marketing Channels2.   Importance of Marketing Channels3.   Understand Customer Needs4.   Role of Ma...
5.Channel Design DecisionsAnalyze        Customer Needs                       Decisions                   www.kristofjongc...
Outline:1.   Defining Marketing Channels2.   Importance of Marketing Channels3.   Understand Customer Needs4.   Role of Ma...
6.Establish Objectives & Constraints          Channel          Objective          Product          Prepare for larger envi...
Outline:7. Identify & Evaluate Major Channel Alternatives8. Channel Management Decisions9. Channel Integration & Systems10...
7.Identify & Evaluate Major Channel                  AlternativesSelective Distribution   Exclusive Distribution          ...
Outline:7. Identify & Evaluate Major Channel Alternatives8. Channel Management Decisions9. Channel Integration & Systems10...
8.Channel Management DecisionsSelectTrainMotivate   CHANNELEvaluate   MEMBERSModify                www.kristofjongco.blogs...
Outline:7. Identify & Evaluate Major Channel Alternatives8. Channel Management Decisions9. Channel Integration & Systems10...
9.Channel Integration & SystemsVertical System   Horizontal System                Multi Channel System                  ww...
Outline:7. Identify & Evaluate Major Channel Alternatives8. Channel Management Decisions9. Channel Integration & Systems10...
10. Channel Conflict, Cooperation &           Competition Conflict Cooperate Competition               www.kristofjongco.b...
Summary:             Designing and Marketing Integration Marketing                              ChannelsThink             ...
Designing & Managing Integrated Marketing               Channels              Kristoffer Z. Jongco             Marketing M...
Chap. 15Designing and Managing Integrated       Marketing Channels        Raymund C. Piñon    Marketing Management V57    ...
Outline• 6th Task of Marketing – Delivering Customer Value• Marketing channels: definition, importance, examples• Function...
Recall: Marketing is…• A system of profitably creating, DELIVERING  and communicating superior VALUE to satisfy  customers...
To achieve this,      the 6th Task of Marketing is…1. Developing marketing strategies and plans2. Capturing marketing insi...
1st some definitions•   Marketing Channels, Trade Channels, Distribution Channels     – A set of interdependent organizati...
Examples of Intermediaries• Merchants   – Wholesalers and Retailers   – Buy, take title to goods, resell• Agents   – Broke...
Why are Channels Important?                 Channel functions and flows•   Gather marketing information•   Develop and dis...
Why are Channels Important?                  Marketing channel system• Choice of particular set of marketing channels a fi...
So (again) Step #1 is…       Understanding Customer Needs    Consumers choose where to buy based on:• Price• Product assor...
There are 5 marketing flows in a marketing channelPhysical Flow                   Transporters,                    Transpo...
Channel Levels (Paths)         There are different levels of marketing channels in                 consumer and industrial...
A broader view of delivering customer value:                        Value Networks         Partnerships created to source,...
Channel Design Decisions      What are key issues in designing channels?1. Analyzing customer needs2. Establishing channel...
In Channel Design, Step #1 is…         Analyze customers’ desired service output levelThere are 5 channel service outputs•...
Channel Design Decision Step #2 is…           Establishing channel objectives and constraints•       State channel target ...
Channel Design Decisions          In establishing channel objectives and constraints•       Vary objectives to suit produc...
In Channel Design Decision, Step #3 is…     Identifying and evaluating major channel alternatives               Choose a m...
In Evaluating Channels               Consider 3 elements of channel alternatives1.       What types of business intermedia...
In Channel Design     Evaluate major channel alternatives using…• Economic criteria• Control criteria• Adaptive criteria
Economic criteria in channel evaluation       Each channel alternative will generate different                 levels of s...
Channel Design Decisions    Control and adaptive criteria in evaluation• Using sales agency poses control problems for you...
Channel Management Decisions     After choosing a channel system, the company must:1. Select individual channel members2. ...
Channel Management Decisions        After choosing a channel system, the company must:1. Set criteria for selection of cha...
Channel Management Decisions           After choosing a channel system, the company must:2. Train and motivate channel mem...
Channel Management Decisions                After choosing a channel system, the company must:2.    Train and motivate cha...
Channel Management Decisions                  In motivating channel members2. Forge long-term partnerships by clarifying e...
Channel Management Decisions                             In motivating channel members2.       Streamline supply chain and...
Channel Management Decisions      After choosing a channel system, the company must:3. Evaluate individual channel members...
Channel Management Decisions           After choosing a channel system, the company must:4.       Modify channel design an...
In managing channels, how much effort to          devote to push or pull?• Push strategy   – for low-involvement, impulse ...
Channel Integration and Systems        Some of the recent developments in channels• Vertical Marketing Systems   –   Corpo...
Channel Integration and Systems       Some of the recent developments in channels• Vertical Marketing Systems   – Producer...
Channel Integration and Systems     Some of the recent developments in channels• New competition in retailing  – Is no lon...
Channel Integration and Systems      Some of the recent developments in channels• Horizontal Marketing Systems  – Two or m...
Channel Integration and Systems      Some of the recent developments in channels• Integrating Multi-channel Marketing Syst...
Channel Integration and Systems      3 benefits of multi-channel marketing systems• Increased market coverage   – Customer...
Channel Integration and Systems        Disadvantages of multi-channel marketing systems•   Channel conflicts     – Channel...
In Channel Architecture                                                                         Demand-generation Tasks   ...
Conflict, Cooperation and Competition                                Causes of channel conflicts•   Goal incompatibility  ...
Conflict, Cooperation and Competition                           Management of channel conflicts•   As companies add channe...
E-Commerce Marketing Practices                            Some definitions• E-business   – Use of electronic means and pla...
E-Commerce Marketing Practices                      Some advantages• Provides convenient, informative and personalized  ex...
E-Commerce Marketing Practices     3 Aspects of online transactions in retailing competition• Customer interaction with th...
E-Commerce Marketing Practices                  2 Types of Online Competitors• Pure-Click Companies   – Launched a website...
E-Commerce Marketing Practices        Issues of using online channels for Brick-and-Click                     and how to h...
M-Commerce• Wireless internet-connectivity to do business• Location-based services
Summary of Top 10 Concepts• 6th Task of Marketing – Delivering Customer Value• Marketing channels: definition, importance,...
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Markma Group 4 Chapter 15 Presentation

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Group 4 Markma Presentation Top 10 Concepts for Chapter 15- Designing and Managing Integrated Marketing Channels

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Markma Group 4 Chapter 15 Presentation

  1. 1. CHAPTER 15:DESIGNING AND MANAGING INTEGRATED MARKETING CHANNELS GROUP # 4 CRISOSTOMO, KATHLEEN LIZETTE GALICANO, SITON JONGCO, KRISTOFFER PIÑON, RAYMUND
  2. 2. Crisostomo, Kathleen Lizette C.MARKMACHAPTER 15:DESIGNING AND MANAGINGINTEGRATED MARKETING CHANNELS
  3. 3. Top 10 Concepts1. Marketing Channel System: Push and Pull2. Categories of Buyers3. Decisions in Designing a Marketing Channel System4. Analyzing customer needs: Channel Service Outputs5. Identifying Channel Alternatives: Three Elements6. Channel-Management Decisions7. Channel Power8. Channel Integration and Systems9. Channel Coordination / Channel Conflict10. E-Commerce Marketing Practices
  4. 4. Top 10 Concepts1. Marketing Channel System: Push and Pull2. Categories of Buyers3. Decisions in Designing a Marketing Channel System4. Analyzing customer needs: Channel Service Outputs5. Identifying Channel Alternatives: Three Elements6. Channel-Management Decisions7. Channel Power8. Channel Integration and Systems9. Channel Coordination / Channel Conflict10. E-Commerce Marketing Practices
  5. 5. • Push strategy uses the manufacturer’s sales force, trade promotion money, and other means to induce intermediaries to carry, promote, and sell the product to end users. - used for low brand loyalty in categories or impulse items
  6. 6. • A pull strategy uses advertising, promotion, and other forms of communication to persuade consumers to demand the product from intermediaries. - used when consumers can differentiate brands well and brand are chosen prior to purchase
  7. 7. Top 10 Concepts1. Marketing Channel System: Push and Pull2. Categories of Buyers3. Decisions in Designing a Marketing Channel System4. Analyzing customer needs: Channel Service Outputs5. Identifying Channel Alternatives: Three Elements6. Channel-Management Decisions7. Channel Power8. Channel Integration and Systems9. Channel Coordination / Channel Conflict10. E-Commerce Marketing Practices
  8. 8. Categories of Buyers• Habitual Buyers • Same place, same manner• High value deal seekers • They know what they need and they surf before buying at the lowest possible price
  9. 9. Categories of Buyers• Variety-loving shoppers • Gather info through various channels, take advantage of high-touch services, then buy in their favorite channel regardless of price• High-involvement shoppers • Gather info through alls channels and purchase in a low cost channel but takes advantage of customer support from a high-touch channel
  10. 10. Top 10 Concepts1. Marketing Channel System: Push and Pull2. Categories of Buyers3. Decisions in Designing a Marketing Channel System4. Analyzing customer needs: Channel Service Outputs5. Identifying Channel Alternatives: Three Elements6. Channel-Management Decisions7. Channel Power8. Channel Integration and Systems9. Channel Coordination / Channel Conflict10. E-Commerce Marketing Practices
  11. 11. Decisions in Designing a Marketing Channel SystemA. Analyze customer needs* Greater service = greater channel costs = higher prices
  12. 12. Decisions in Designing a Marketing Channel SystemA. Analyze customer needs* Greater service = greater channel costs = higher pricesB. Establish channel objectives* Which market segment to serve and what best channel to use
  13. 13. Decisions in Designing a Marketing Channel SystemA. Analyze customer needs* Greater service = greater channel costs = higher pricesB. Establish channel objectives* Which market segment to serve and what best channel to useC. Identify major channel alternatives* Each channel reaches a different segment and delivers the right product at the least cost
  14. 14. Decisions in Designing a Marketing Channel SystemA. Analyze customer needs* Greater service = greater channel costs = higher pricesB. Establish channel objectives* Which market segment to serve and what best channel to useC. Identify major channel alternatives* Each channel reaches a different segment and delivers the right product at the least costD. Evaluate major channel alternative* vs. economic, control and adaptive criteria
  15. 15. Top 10 Concepts1. Marketing Channel System: Push and Pull2. Categories of Buyers3. Decisions in Designing a Marketing Channel System4. Analyzing customer needs: Channel Service Outputs5. Identifying Channel Alternatives: Three Elements6. Channel-Management Decisions7. Channel Power8. Channel Integration and Systems9. Channel Coordination / Channel Conflict10. E-Commerce Marketing Practices
  16. 16. Analyzing customer needs: Channel Service Outputs– Lot size: How many can be purchased on 1 occasion? ?
  17. 17. Analyzing customer needs: Channel Service Outputs– Lot size: How many can be purchased on 1 occasion?– Waiting and delivery time: The faster, the better
  18. 18. Analyzing customer needs: Channel Service Outputs– Lot size: How many can be purchased on 1 occasion?– Waiting and delivery time: The faster, the better– Spatial convenience: how easy is it to buy the product?
  19. 19. Analyzing customer needs: Channel Service Outputs– Product variety: more choices = more chances of finding what is needed
  20. 20. Analyzing customer needs: Channel Service Outputs– Service back-up: add-ons
  21. 21. Top 10 Concepts1. Marketing Channel System: Push and Pull2. Categories of Buyers3. Decisions in Designing a Marketing Channel System4. Analyzing customer needs: Channel Service Outputs5. Identifying Channel Alternatives: Three Elements6. Channel-Management Decisions7. Channel Power8. Channel Integration and Systems9. Channel Coordination / Channel Conflict10. E-Commerce Marketing Practices
  22. 22. Identifying Channel Alternatives: Three Elements 1. Types of intermediaries• Do I need a wholesaler? Retailer? Dealer?
  23. 23. Identifying Channel Alternatives: Three Elements 1. Types of intermediaries * Do I need a wholesaler? Retailer? Dealer? 2. Number of intermediaries* Distribution: Exclusive? Selective? Intensive? * Risk = price wars among retailers
  24. 24. Identifying Channel Alternatives: Three Elements 1. Types of intermediaries * Do I need a wholesaler? Retailer? Dealer? 2. Number of intermediaries* Distribution: Exclusive? Selective? Intensive? * Risk = price wars among retailers 3. Terms and responsibilities * Respect + Opportunity to make profits
  25. 25. Top 10 Concepts1. Marketing Channel System: Push and Pull2. Categories of Buyers3. Decisions in Designing a Marketing Channel System4. Analyzing customer needs: Channel Service Outputs5. Identifying Channel Alternatives: Three Elements6. Channel-Management Decisions7. Channel Power8. Channel Integration and Systems9. Channel Coordination / Channel Conflict10. E-Commerce Marketing Practices
  26. 26. Channel-Management Decisions Because to the customers, the channels are Select the company!
  27. 27. Channel-Management Decisions Because to the customers, the channels are Select the company! Train Because intermediaries are partners in satisfying customers!Motivate
  28. 28. Channel-Management Decisions Because to the customers, the channels are Select the company! Train Because intermediaries are partners in satisfying customers!MotivateEvaluate Is the strategy still working? (external analysis Modify and current channels)
  29. 29. Top 10 Concepts1. Marketing Channel System: Push and Pull2. Categories of Buyers3. Decisions in Designing a Marketing Channel System4. Analyzing customer needs: Channel Service Outputs5. Identifying Channel Alternatives: Three Elements6. Channel-Management Decisions7. Channel Power8. Channel Integration and Systems9. Channel Coordination / Channel Conflict10. E-Commerce Marketing Practices
  30. 30. • Channel Power is the ability to alter channel’s behavior• Cooperation is a huge challenge!
  31. 31. Channel Powera. Coercive power- Withdraw resource or terminate relationshipb. Reward power- Extra benefit for performancec. Legitimate power- Behavior warranted under the contractd. Expert power- Must develop new expertise for them to cooperatee. Referent power- Respect causes intermediaries to have pride in the association
  32. 32. Top 10 Concepts1. Marketing Channel System: Push and Pull2. Categories of Buyers3. Decisions in Designing a Marketing Channel System4. Analyzing customer needs: Channel Service Outputs5. Identifying Channel Alternatives: Three Elements6. Channel-Management Decisions7. Channel Power8. Channel Integration and Systems9. Channel Coordination / Channel Conflict10. E-Commerce Marketing Practices
  33. 33. Channel Integration and SystemsVertical Marketing Systems -Producer + Wholesaler + Retailer = Unified system under channel captain - Corporate (single ownership), administered or contractual (independent firms)
  34. 34. Channel Integration and SystemsVertical Marketing Systems Horizontal - 2 or more unrelated Marketing Systems companies put together resources to exploit an emerging market
  35. 35. Channel Integration and SystemsVertical Marketing Systems - More marketing channels/ strategies of 1 Horizontal channel reflect the Marketing Systems strategies of other channels - Goal: maximum market Integrated Multichannel coverage Marketing Systems
  36. 36. Top 10 Concepts1. Marketing Channel System: Push and Pull2. Categories of Buyers3. Decisions in Designing a Marketing Channel System4. Analyzing customer needs: Channel Service Outputs5. Identifying Channel Alternatives: Three Elements6. Channel-Management Decisions7. Channel Power8. Channel Integration and Systems9. Channel Coordination / Channel Conflict10. E-Commerce Marketing Practices
  37. 37. • Channel Coordination – channel members are brought together to advance the goals of the channel
  38. 38. • Channel conflict - one member’s actions prevent another channel from achieving its goal* Can be vertical, horizontal or multichannel
  39. 39. Top 10 Concepts1. Marketing Channel System: Push and Pull2. Categories of Buyers3. Decisions in Designing a Marketing Channel System4. Analyzing customer needs: Channel Service Outputs5. Identifying Channel Alternatives: Three Elements6. Channel-Management Decisions7. Channel Power8. Channel Integration and Systems9. Channel Coordination / Channel Conflict10. E-Commerce Marketing Practices
  40. 40. * Online retailers provide convenient, informative and personalized experiences without: • Retail floor space • Staff • Inventory* Customer service is critical: no social interaction
  41. 41. E-Commerce Marketing PracticesPure-click Launched a website without any previous experience as a firm
  42. 42. E-Commerce Marketing Practices Pure-click Launched a website without any previous experience as a firmBrick-and-click - Existing companies with an added online site - Risk: conflict with offline intermediaries
  43. 43. Designing and Managing Integrated Marketing Channels Galicano Siton Markma – v57
  44. 44. What is a Marketing Channel? A marketing channel Producer Agent system is the particular set of interdependent Retailer organizations involved in the process of making a product or serviceProduct to the Consumer available for use or consumption.
  45. 45. Channels and Marketing Decisions Producer A push strategy uses the manufacturer’sConsumer Sales Force sales force, trade promotion money, and other means to induce intermediaries to carry, Retailer Wholesaler promote, and sell the product to end users
  46. 46. Channels and Marketing DecisionsA pull strategy uses Advertiseadvertising, Demandpromotion, and Pull Productother forms of Manufacturercommunication topersuade consumersto demand theproduct fromintermediaries
  47. 47. Buyer Expectations for Channel Integration • Ability to order a product online and pick it up at a Ease convenient retail locationExpertise Experience • Ability to return an online- ordered product to a Product nearby store • Right to receive discounts based on total online and offline purchases
  48. 48. Category and Types of Buyers Habitual Quality Buyers Service High Value deal Seakers Variety Loving Shoppers Buyers High Affinity Price Involvement Shoppers Value
  49. 49. Channel Member FunctionsGather Information• Develop and disseminate persuasive communication Reach Agreement on price and terms • Acquire funds to finance inventories Assume risk and Provide for storage Provide for buyers payment of their bills • Supervise actual transfer of ownership
  50. 50. Designing aMarketing Channel System Analyze Establish customer channel needs objectives Identify Evaluate major major channel channel alternatives alternatives
  51. 51. Channel Service Outputs Lot size Waiting/deliveryService backup time Spatial Product variety convenience
  52. 52. Identifying Channel Alternatives• Types of intermediaries• Number of intermediaries• Terms and responsibilities
  53. 53. Number of Intermediaries• Exclusive• Selective• Intensive
  54. 54. Terms and Responsibilities of Channel Members• Price policy• Condition of sale• Distributors’ territorial rights• Mutual services and responsibilities
  55. 55. Channel-Management Decisions Select Modify Train Evaluate Motivate
  56. 56. Channel Power• Coercive• Reward• Legitimate• Expert• Referent
  57. 57. Channel Integration and SystemsVertical marketing systems• Corporate VMS• Administered VMS• Contractual VMSHorizontal marketing systemsMultichannel systems
  58. 58. What is Channel Conflict?• Channel conflict occurs when one member’s actions prevent another channel from achieving its goal.• Types of channel conflict – Vertical – Horizontal – Multichannel
  59. 59. Causes of Channel Conflict• Goal incompatibility• Unclear roles and rights• Differences in perception• Intermediaries’ dependence on manufacturer
  60. 60. Table 15.3 Strategies for Managing Channel Conflict• Adoption of • Cooptation superordinate goals • Diplomacy• Exchange of employees • Mediation• Joint membership in • Arbitration trade associations • Legal recourse
  61. 61. Designing & Managing Integrated Marketing Channels Kristoffer Z. Jongco Marketing Management www.kristofjongco.blogspot.com
  62. 62. Outline:1. Defining Marketing Channels2. Importance of Marketing Channels3. Understand Customer Needs4. Role of Marketing Channels5. Channel Design Decisions6. Establish Objectives & Constraints www.kristofjongco.blogspot.com
  63. 63. Outline:7. Identify & Evaluate Major Channel Alternatives8. Channel Management Decisions9. Channel Integration & Systems10. Channel Conflict, Cooperation & Competition www.kristofjongco.blogspot.com
  64. 64. Designing and Managing Integrated Marketing Channels (10 Things to Remember) www.kristofjongco.blogspot.com
  65. 65. Outline:1. Defining Marketing Channels2. Importance of Marketing Channels3. Understand Customer Needs4. Role of Marketing Channels5. Channel Design Decisions6. Establish Objectives & Constraints www.kristofjongco.blogspot.com
  66. 66. 1. Marketing ChannelsMeans by which firms attempt to inform, persuade, and remind consumers, directly or indirectly, about the products and brands they sell
  67. 67. Outline:1. Defining Marketing Channels2. Importance of Marketing Channels3. Understand Customer Needs4. Role of Marketing Channels5. Channel Design Decisions6. Establish Objectives & Constraints www.kristofjongco.blogspot.com
  68. 68. 2. Importance of Marketing ChannelsNew Ideas Increase Profits www.kristofjongco.blogspot.com
  69. 69. Outline:1. Defining Marketing Channels2. Importance of Marketing Channels3. Understand Customer Needs4. Role of Marketing Channels5. Channel Design Decisions6. Establish Objectives & Constraints www.kristofjongco.blogspot.com
  70. 70. 3. Understand Customer NeedsCustomers Product/Services www.kristofjongco.blogspot.com
  71. 71. Outline:1. Defining Marketing Channels2. Importance of Marketing Channels3. Understand Customer Needs4. Role of Marketing Channels5. Channel Design Decisions6. Establish Objectives & Constraints www.kristofjongco.blogspot.com
  72. 72. 4.Role of Marketing Channels 0 Level 1 Level 2 LevelManufacturer 3 Level Manufacturer’s Industrial Industrial Sales Branch Distributor Customer www.kristofjongco.blogspot.com
  73. 73. Outline:1. Defining Marketing Channels2. Importance of Marketing Channels3. Understand Customer Needs4. Role of Marketing Channels5. Channel Design Decisions6. Establish Objectives & Constraints www.kristofjongco.blogspot.com
  74. 74. 5.Channel Design DecisionsAnalyze Customer Needs Decisions www.kristofjongco.blogspot.com
  75. 75. Outline:1. Defining Marketing Channels2. Importance of Marketing Channels3. Understand Customer Needs4. Role of Marketing Channels5. Channel Design Decisions6. Establish Objectives & Constraints www.kristofjongco.blogspot.com
  76. 76. 6.Establish Objectives & Constraints Channel Objective Product Prepare for larger environment www.kristofjongco.blogspot.com
  77. 77. Outline:7. Identify & Evaluate Major Channel Alternatives8. Channel Management Decisions9. Channel Integration & Systems10. Channel Conflict, Cooperation &Competition www.kristofjongco.blogspot.com
  78. 78. 7.Identify & Evaluate Major Channel AlternativesSelective Distribution Exclusive Distribution Intensive Distribution www.kristofjongco.blogspot.com
  79. 79. Outline:7. Identify & Evaluate Major Channel Alternatives8. Channel Management Decisions9. Channel Integration & Systems10. Channel Conflict, Cooperation &Competition www.kristofjongco.blogspot.com
  80. 80. 8.Channel Management DecisionsSelectTrainMotivate CHANNELEvaluate MEMBERSModify www.kristofjongco.blogspot.com
  81. 81. Outline:7. Identify & Evaluate Major Channel Alternatives8. Channel Management Decisions9. Channel Integration & Systems10. Channel Conflict, Cooperation &Competition www.kristofjongco.blogspot.com
  82. 82. 9.Channel Integration & SystemsVertical System Horizontal System Multi Channel System www.kristofjongco.blogspot.com
  83. 83. Outline:7. Identify & Evaluate Major Channel Alternatives8. Channel Management Decisions9. Channel Integration & Systems10. Channel Conflict, Cooperation &Competition www.kristofjongco.blogspot.com
  84. 84. 10. Channel Conflict, Cooperation & Competition Conflict Cooperate Competition www.kristofjongco.blogspot.com
  85. 85. Summary: Designing and Marketing Integration Marketing ChannelsThink Profit Cooperate Channels DecisionCustomer Needs www.kristofjongco.blogspot.com
  86. 86. Designing & Managing Integrated Marketing Channels Kristoffer Z. Jongco Marketing Management www.kristofjongco.blogspot.com
  87. 87. Chap. 15Designing and Managing Integrated Marketing Channels Raymund C. Piñon Marketing Management V57 Prof. Bong De Ungria
  88. 88. Outline• 6th Task of Marketing – Delivering Customer Value• Marketing channels: definition, importance, examples• Functions of marketing channels• Flows and levels of marketing channels• Value networks – a broader view of customer value delivery• How to design marketing channels• Challenges in managing channels• Integrated marketing channels – a new development• Channel conflicts and how they are managed• Key issues with e-commerce
  89. 89. Recall: Marketing is…• A system of profitably creating, DELIVERING and communicating superior VALUE to satisfy customers’ needs, wants and demands better than competition.
  90. 90. To achieve this, the 6th Task of Marketing is…1. Developing marketing strategies and plans2. Capturing marketing insights and performance3. Connecting with customers4. Building strong brands5. Shaping the marketing offer6. Delivering and communicating value7. Creating successful long-term growth
  91. 91. 1st some definitions• Marketing Channels, Trade Channels, Distribution Channels – A set of interdependent organizations involved in the process of making products or services available for use or consumption – A set of pathways a product or service follows after production, culminating in purchase and use by the final end-user – Intermediaries performing a variety of functions• Value-delivery network – A company’s supply chain and how it partners with specific suppliers and distributors to make products and bring them to markets• Value-delivery system – All the expectancies the customers will have on the way to obtaining and using the offering• Value networks – A system of partnerships and alliances that a firm creates to source, augment and deliver its offerings
  92. 92. Examples of Intermediaries• Merchants – Wholesalers and Retailers – Buy, take title to goods, resell• Agents – Brokers, manufacturers’ representatives, sales agents – Look for customers, negotiate for producer, don’t take title to goods• Facilitators – Transportation companies, warehouses banks, advertising agencies – Assist in the distribution process but don’t take title to goods nor negotiate on purchases or sales
  93. 93. Why are Channels Important? Channel functions and flows• Gather marketing information• Develop and disseminate persuasive communications• Reach agreement on prices and terms to effect transfer of ownership or possession of goods• Place order with manufacturers• Acquire funds to finance inventory• Assume risks for carrying out channel functions• Provide for storage and movement of physical products• Provide for buyers’ payment of bills through banks• Oversee actual transfer of ownership of goods• Convert potential buyers into profitable customers
  94. 94. Why are Channels Important? Marketing channel system• Choice of particular set of marketing channels a firm employs is critical – They account for 30% to 50% of SRP – They can convert potential buyers to profitable customers – Channel decisions affect all other marketing decisions • Pricing • Sales force and advertising decisions • Involve long-term commitments with other firms as well as a set of policies and procedures • Channel decisions must align with overall strategy
  95. 95. So (again) Step #1 is… Understanding Customer Needs Consumers choose where to buy based on:• Price• Product assortment• Convenience• Personal shopping goals Marketers using different channels must be aware that different consumers have different needs during the buying process
  96. 96. There are 5 marketing flows in a marketing channelPhysical Flow Transporters, Transporters, Suppliers Manufacturer Dealers Transporters Customers Warehouses WarehousesTitle Flow Suppliers Manufacturer Dealers CustomersPayment Flow Suppliers Banks Manufacturer Banks Dealers Banks CustomersInformation Flow Transporters, Transporters, Transporters, Suppliers Warehouses, Manufacturer Warehouses, Dealers Customers Banks Banks BanksPromotions Flow Advertising Advertising Suppliers Manufacturer Dealers Customers agencies agencies
  97. 97. Channel Levels (Paths) There are different levels of marketing channels in consumer and industrial markets Consumer Marketing Channels Industrial Marketing Channels 0-level 1-level 2-level 3-level 0-level 1-level 2-level 3-levelManufacturer Manufacturer Manufacturer Manufacturer Manufacturer Manufacturer Manufacturer Manufacturer Wholesaler Wholesaler Manufacturer’s Manufacturer’s Representative Sales Branch Jobber Industrial distributor Retailer Retailer Retailer Industrial Industrial Industrial Industrial Consumer Consumer Consumer Consumer customers customers customers customers
  98. 98. A broader view of delivering customer value: Value Networks Partnerships created to source, augment & deliver offerings• From a linear view -> Supply Chain – See markets as destinations• To a customer-centric view -> Demand Chain Planning – Emphasize what customers are looking for instead of what we are selling – SIVA 4-Ps • Solutions Product • Information Promotions • Value Price • Access Placement• To a broad view of customer value delivery -> Value Networks – Seeing the company at the center of a value network – Include suppliers, suppliers’ suppliers, immediate customers and their end customers – A company needs to orchestrate these parties in order to deliver superior value to the target market – Managing value chains require increased investments in IT and software • SCM • SAP, Oracle • ERP • CRM
  99. 99. Channel Design Decisions What are key issues in designing channels?1. Analyzing customer needs2. Establishing channel objectives3. Evaluating major channel alternatives
  100. 100. In Channel Design, Step #1 is… Analyze customers’ desired service output levelThere are 5 channel service outputs• Lot size – customers prefer lot size of one• Waiting and delivery time – fast delivery channels• Spatial convenience – ease of purchase• Product variety – greater assortment• Service back-up – credit, delivery, service, repair, training, consultingNote: increased service output = increased channel costs, and increased prices to consumers. Some customers are willing to accept smaller service outputs if they could save on costs
  101. 101. Channel Design Decision Step #2 is… Establishing channel objectives and constraints• State channel target service output level• Arrange channel tasks to minimize total channel costs and provide desired service level output• Choose market segments to serve and best channels for each• In entering new markets, observe what competitors are doing• Adapt channel objectives to larger environmental context – E.g. During depression – use shorter channels to maintain price – E.g. Note legal constraints – vs. monopoly
  102. 102. Channel Design Decisions In establishing channel objectives and constraints• Vary objectives to suit product characteristics – For perishables – direct marketing – For bulky (building materials) – minimize shipping distance and amount of handling – Nonstandard products (custom-built machinery) – sales force – Products needing installation or maintenance (heating or cooling systems) – sales force or franchised dealers – High-unit value products (generators of turbines) – sales force
  103. 103. In Channel Design Decision, Step #3 is… Identifying and evaluating major channel alternatives Choose a mix of channels that reach different segments of buyers and delivers the right products at the least cost Channel Advantages DisadvantagesSales Force or Can handle complex products Too expensiveowned branches and transactionsInternet, Less expensive Not effective with complextelemarketing productsDistributors Can create sales Customer contact by company is lostManufacturer’s Able to contact customers at Selling effort per customer is lessrepresentatives low cost per customer intense than if company reps did because several clients share the selling costs
  104. 104. In Evaluating Channels Consider 3 elements of channel alternatives1. What types of business intermediaries are available?2. How many intermediaries are needed? – Exclusive distribution – limited number of intermediaries • Maintain control of service levels and outputs offered by intermediaries – Selective distribution – few but less than all • Gain adequate market coverage, more control, less cost – Intensive distribution • Places its products in as many outlets as possible3. What are the terms, and what are the responsibilities of each channel members?
  105. 105. In Channel Design Evaluate major channel alternatives using…• Economic criteria• Control criteria• Adaptive criteria
  106. 106. Economic criteria in channel evaluation Each channel alternative will generate different levels of sales and costs high Sales Value- force Added partners Direct sales Value-Added of Sales Distributors channels Retail Stores Telemarketing “Indirect” channels Internet Direct marketing low channels low high Cost per TransactionTry to align customers and channels to maximize demand at the lowest overall cost
  107. 107. Channel Design Decisions Control and adaptive criteria in evaluation• Using sales agency poses control problems for you – They are independent firms seeking to maximize profits – They concentrate on customers who buy – They may not master technical details of product or handle promotions effectively• In rapidly changing, volatile, or uncertain product markets, producers need channel structures and policies that provide high adaptability
  108. 108. Channel Management Decisions After choosing a channel system, the company must:1. Select individual channel members2. Train and motivate channel members3. Evaluate individual channel members4. Modify channel design and arrangements over time
  109. 109. Channel Management Decisions After choosing a channel system, the company must:1. Set criteria for selection of channel members – Number of years in business – Other lines carried – Growth and profit records – Financial strength – Cooperativeness – Service reputation – Size and quality of sales force – Location – Type of clientele – Future growth potential
  110. 110. Channel Management Decisions After choosing a channel system, the company must:2. Train and motivate channel members – Understand intermediaries’ needs and wants – Construct a channel positioning – Implement capacity-building programs • Training • Market research – Exercise channel power to compel action
  111. 111. Channel Management Decisions After choosing a channel system, the company must:2. Train and motivate channel members – Types of power to elicit cooperation • Coercive power – Threaten to withdraw a resource or terminate a relationship • Reward power – Higher margins, deals, premiums, cooperative advertising allowances, display allowances, sales contest, bonuses • Legitimate power – Use contract agreements to force compliance • Expert power – Posses special knowledge the intermediary values • Referent power – Intermediary feels proud to be associated with producer
  112. 112. Channel Management Decisions In motivating channel members2. Forge long-term partnerships by clarifying expectations – Market coverage – Inventory levels – Marketing development – Account solicitation – Technical advise and services – Marketing information
  113. 113. Channel Management Decisions In motivating channel members2. Streamline supply chain and cut costs: ECR – Efficient Consumer Response practices help organize relationship in 3 areas: – Demand-side management • Stimulate demand with joint sales and marketing activities – Supply-side management • Focus on logistics and supply chain activities to optimize supply – Enablers and integrators • Use IT and process improvement tools to support joint activities
  114. 114. Channel Management Decisions After choosing a channel system, the company must:3. Evaluate individual channel members on… – Sales quota achievement – Average inventory levels – Customer delivery time – Treatment of damaged and lost goods – Cooperation in training and promotions programs Note: underperformers need to be counseled, retrained, motivated or terminated
  115. 115. Channel Management Decisions After choosing a channel system, the company must:4. Modify channel design and arrangements over time when: – Channel is not working as planned – Consumer buying patterns change – Market expands – New competition arises – Innovative distribution channels emerge – Product moves into later stages of PLC Note: change may mean adding or dropping individual channel members, adding or dropping market channels, or developing totally new ways to sell goods
  116. 116. In managing channels, how much effort to devote to push or pull?• Push strategy – for low-involvement, impulse products – Use sales force, trade promo to induce intermediaries to carry, promote and sell products to end-users• Pull strategy – For high-involvement, differentiated offers – Use advertising, consumer promotions and other forms of communication to persuade consumers to demand the product from intermediaries
  117. 117. Channel Integration and Systems Some of the recent developments in channels• Vertical Marketing Systems – Corporate VMS – Administered VMS – Contractual VMS – New competition in retailing• Horizontal Marketing Systems• Integrating Multi-channel Marketing Systems
  118. 118. Channel Integration and Systems Some of the recent developments in channels• Vertical Marketing Systems – Producer, wholesaler(s) and retailer(s) acting as a unified system – Channel captain owns others or franchises them or has so much power that they all cooperate – Strong channel members’ attempts to control channel behavior and eliminate conflict – Achieve economies of scale via size, bargaining power, and elimination of duplicate services – Provides extensive exchange of information
  119. 119. Channel Integration and Systems Some of the recent developments in channels• New competition in retailing – Is no longer between independent business units but between • whole systems of centrally-planned networks (Corporate, administered, and contractual) • competing against one another • to achieve the best economies and customer response
  120. 120. Channel Integration and Systems Some of the recent developments in channels• Horizontal Marketing Systems – Two or more unrelated companies put together resources or programs to exploit an emerging marketing opportunity – Each company lacks capital, know-how, production or marketing resources to venture alone or is afraid of the risks – Arrangements may be temporary, permanent or result in joint-venture company
  121. 121. Channel Integration and Systems Some of the recent developments in channels• Integrating Multi-channel Marketing Systems – Multi-channel marketing • A company uses two or more channels to reach one or more customer segments – Integrated marketing channel system • Strategies and tactics of selling through one channel reflects the strategies and tactics of selling through other channels
  122. 122. Channel Integration and Systems 3 benefits of multi-channel marketing systems• Increased market coverage – Customers can shop for company products in more places – Multi-channel shoppers are more profitable customers• Lower channel cost – Selling by phone is cheaper than selling by personal visit to small customers• More customized selling – Adding a technical sales force to sell more complex products
  123. 123. Channel Integration and Systems Disadvantages of multi-channel marketing systems• Channel conflicts – Channels competing for same customer – New channels independent and makes cooperation difficult• Problems with control – Execution of merchandizing and promotions programs – Market coverage and frequency of visits to customers – Inventory levels – Handling of customer complaints, returns and damaged goods – Allocation of effort to other principals served by intermediaries
  124. 124. In Channel Architecture Demand-generation Tasks Determine which channels should perform which functions Better Disseminate Reach Pace Acquire Assume Facilitate Facilitate Oversee Information information price orders funds for risks product payment ownership agreement inventories storage & terms movement Internet National accountMarketing channels and Methods management Direct sales Tele- Customer marketing Vendor Direct mail Retail stores Distributors Dealers and value-added resellers Advertising Multi-channel architecture optimizes coverage, customization and control, while minimizing costs and conflict
  125. 125. Conflict, Cooperation and Competition Causes of channel conflicts• Goal incompatibility – Low-price market penetration strategy vs. high-margin, short-run profitability• Unclear roles and rights – Territorial boundaries – Sales crediting• Differences in perception – Optimistic vs. pessimistic views on business prospects – Differences in perception about advertising strategy• Intermediaries’ dependence on the manufacturer – Exclusive dealers are at the mercy of manufacturers’ product and pricing policies
  126. 126. Conflict, Cooperation and Competition Management of channel conflicts• As companies add channels to grow sales, they risk creating channel conflicts• Too much conflict is dysfunctional• The challenge is not to eliminate conflicts but to manage them through – Adoption of super-ordinate goals – agree on goals they jointly seek – Exchange of employees – e.g. between manufacturer and dealer – Joint membership in trade associations – manufacturers and marketers – Co-optation – include leaders in boards, advisory councils – Diplomacy, mediation, or arbitration – conflict resolution methods – Legal recourse
  127. 127. E-Commerce Marketing Practices Some definitions• E-business – Use of electronic means and platforms to conduct a company’s business• E-commerce – Company or site offers to transact or facilitate the selling of products and services online• E-purchasing – Purchase of goods, services and information from online sources• E-marketing – Efforts to inform buyers, communicate, promote and sell company products and services over the internet
  128. 128. E-Commerce Marketing Practices Some advantages• Provides convenient, informative and personalized experiences for different types of customers• Allows online retailers to sell low-volume products to niche markets at lesser or no cost in maintaining retail floor space, staff, and inventory
  129. 129. E-Commerce Marketing Practices 3 Aspects of online transactions in retailing competition• Customer interaction with the Website• Delivery of the product• Ability to address problems when they occur
  130. 130. E-Commerce Marketing Practices 2 Types of Online Competitors• Pure-Click Companies – Launched a website without previous existence as a company • Search engines • ISPs • Commerce sites – amazon.com, buy.com – sell all types of products and services – books, music, toys, stocks, clothes, insurance, financial services • Transaction sites • Content sites • Enabler sites• Brick-and-Click Companies – Existing companies that have added an online site for information or e-commerce
  131. 131. E-Commerce Marketing Practices Issues of using online channels for Brick-and-Click and how to handle them• Potential channel conflict with retailers, brokers, agents and branch outlets• How to sell both to intermediaries and online? – Offer different brands or products online – Offer off-line partners higher commissions to offset negative impact on sales – Take orders on the web but have retailers deliver and collect payment
  132. 132. M-Commerce• Wireless internet-connectivity to do business• Location-based services
  133. 133. Summary of Top 10 Concepts• 6th Task of Marketing – Delivering Customer Value• Marketing channels: definition, importance, examples• Functions of marketing channels• Flows and levels of marketing channels• Value networks – a broader view of customer value delivery• How to design marketing channels• Challenges in managing channels• Integrated marketing channels – a new development• Channel conflicts and how they are managed• Key issues with e-commerce
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