Marketing Channels - Module 1: Where Mission Meets Market
Marketing ChannelsModule 1: Where Mission Meets Market @sebinomics Preparation for the Marketing Channels exam at Edinburgh Business School Content extracted from the text book by Lou E. Pelton, Dr. David Strutton, and Dr. James R. Lumpkin All pictures used for educational purposes only. No copyright infringement intended.
1.1 The Elements of Successful Marketing Channels To achieve success in a competitive arena, members of relay teams must pool individual resources to achieve collective goals through a connected system. In addition, this connected system must be ﬂexible enough to accommodate changes in the environment.
1.1 The Elements of Successful Marketing Channels Pooled Resources Distributors acting as ﬁeld operatives, talking with customers, straightening up cases on retail ﬂoors.
1.1 The Elements of Successful Marketing Channels Collective Goals A mission statement is an organization’s strategic charter – a public declaration of why it exists.
1.1 The Elements of Successful Marketing Channels Connected System Organizations cannot exist without markets. All business competition emerges within marketing channels.
1.1 The Elements of Successful Marketing Channels Flexibility As Alderson put it, the organizations and persons involved in channel ﬂows must be ‘sufﬁciently connected to permit the system to operate as a whole, but the bond they share must be loose enough to allow for components to be replaced or added.’
1.2 What is a Marketing Channel? A marketing channel can be deﬁned as an array of exchange relationships that create customer value in the acquisition, consumption, and disposition of products and services. This deﬁnition implies that exchange relationships emerge from market needs as a way of serving market needs.
1.3 Evolution of Marketing Channels Marketing channels always emerge out of a demand that marketplace needs be better served. Production Institutional The Relationship Era & Period & Marketing Marketing Distributive Selling Concept Era Practices Orientation
1.4 Channel Intermediaries: The Customer Value Mediators Channel intermediaries are individuals or organizations who mediate exchange utility in relationships involving two or more partners.
1.4 Channel Intermediaries: The Customer Value Mediators Contactual Efficiency Routinization Sorting Minimizing Uncertainty
1.4 Channel Intermediaries: The Customer Value Mediators Contactual Efficiency Contactual efﬁciency describes this movement toward a point of equilibrium between the quantity and quality of exchange relationships between channel members. When only two parties are involved in an exchange, the relationship is said to be a dyadic relationship.
1.4 Channel Intermediaries: The Customer Value Mediators Routinization The Economost system represents the state of the art in routinization. Routinization refers to the means by which transaction processes are standardized to improve the ﬂow of goods and ser vices through marketing channels. Routinization itself delivers several advantages to all channel participants.
1.4 Channel Intermediaries: The Customer Value Mediators Sorting In a channels context, sorting is often described as a smoothing function. Two principal tasks are associated with the sorting function. They are: a) Categorizing b) Breaking Bulk
1.4 Channel Intermediaries: The Customer Value Mediators Minimizing Uncertainty The role that intermediaries play in reducing uncertainty is perhaps their most overlooked function. Types of uncertainty are: Need Uncertainty: what is available vs what is needed Market Uncertainty: # of sources available for a product or service Transaction Uncertainty: imperfect channel ﬂows between buyers and sellers
1.4 Functions performed by Marketing IntermediariesFacilitating Strategic Aims
1.4 Functions performed by Marketing IntermediariesFulﬁlling Interaction Requirements
1.4 Functions performed by Marketing Intermediaries Satisfying Delivery and Handling Requirements
1.4 Functions performed by Marketing IntermediariesManaging Inventory Requirements
1.4 Channels Relationship Model (CRM) The CRM provides a structure for examining how an array of exchange relationships can create customer value in the distribution of products and services.
1.4 Channels Relationship Model (CRM) Array of Exchange Relationships 1st interaction: within the marketing organization (intraorganizational) 2nd interaction: between marketing organizations (interorganizational) 3rd interaction: between marketing organizations and their environments
1.4 Channels Relationship Model (CRM) Creating Customer Value For customers, marketing channels create form, place, possession, and time utilities.
1.4 Channels Relationship Model (CRM) Products and Services Flows Acquisition Consumption Outsourcing Disposition