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Session 25 MG 220 BBA - 10 Nov 10



Session 25

Session 25
MG 220 Marketing Management
BBA 09 Sec C



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    Session 25  MG 220 BBA - 10 Nov 10 Session 25 MG 220 BBA - 10 Nov 10 Presentation Transcript

    • Part 6:Delivering Value
      > Marketing Channels and Value Networks
      > The Role of Marketing Channels: SKIM
      > Channel-Design decisions
      > Channel-Management decisions: SKIM
      Class Presentation | Session 25 | 10 Nov 2010
    • Marketing Channels and Value NetworksThe Importance of Channels
      Marketing Channels
      Sets of independent organizations involved in the process of making a product or service available for use or consumption
      Among these ‘intermediaries’ are:
      Merchants – who buy, take title to, and resell the merchandise
      Wholesalers, Retailers
      Agents – who search for consumers but do NOT take title
      Brokers, Manufacturers’ representatives, sales agents
      Facilitators – assist in distribution but neither take title NOR negotiate sale/purchase
      Transporters, independent warehouses, ad agencies, banks
      Importance of Channels
      A marketing channel system is the particular set of marketing channels employed by a firm.
      Channels chosen affect all other marketing decisions
      Push strategy involves manufacturers using its own sales force and trade promotion money to include intermediaries
      Appropriate when: low brand loyalty | choice is made at purchasing time | impulse item | benefits are understood
      Pull strategy involves manufacturer using advertising and promotion to persuade consumers to ask intermediaries for the product
      Appr0priate when: High brand loyalty | high involvement | people perceive differences in brands | decision before going to store
      Top marketing companies use both strategies
      MG 220 Marketing Management
    • Marketing Channels and Value NetworksChannel Development
      A new firm typically is a local/limited operation selling in a limited market
      As it grows, it moves in new markets and that is where it needs new partners to sell for it
      Channel system evolves in response to local opportunities
      Hybrid channels
      Consider IBM, Dell, Microsoft
      Selling online (self), through retailers (intermediaries) – CONSUMERS
      Selling using sales force (own) – INSTITUTIONAL SELLING
      All operate parallel and in one market
      Ensuring Channel Integration – consumers would want channels to be working together
      Also understanding different needs of customers:
      Habitual shoppers | High value deal seekers | Variety-loving shoppers | High-involvement shoppers
      MG 220 Marketing Management
    • Marketing Channels and Value NetworksValue Networks
      Demand chain planning
      Company first thinks of the target market and then plans it all backwards
      4Ps replaced by SIVA (Solution | Information | Value | Access)
      Value Networks
      An even broader view. Company at the center
      A system of partnerships and alliances that a firm creates to source, augment and deliver its offerings
      A value network includes: firm’s suppliers, suppliers’ suppliers, immediate customers and their end customers
      Demand chain planning yields several insights
      Company can estimate whether more money is made upstream or downstream
      Company is more aware of disturbances anywhere in the supply chain that might cause costs to change
      Companies can use internet to go online to improve these processes
      Concept of ERP
      To manage entire value networks efficiently, different IT solutions and software is extensively deployed. They form Enterprise Resource Planning (ERP)
      MG 220 Marketing Management
    • The Role of Marketing ChannelsConcept
      Why delegate the ‘selling job’?
      Many producers lack the financial resources to carry out direct marketing
      Producers who do establish their own channels can often earn a greater returnby increasing investment in their own business (EXAMPLE)
      In some cases direct marketing simply is not feasible
      Reducing number of contacts
      Ref: figure
      With and without “D” - Distributor
      MG 220 Marketing Management
    • The Role of Marketing ChannelsChannel Functions and Flows
      Direction of activities
      Some functions have forward flow of activities
      Some have backward flow
      Others have two-way flow
      MG 220 Marketing Management
    • The Role of Marketing ChannelsChannel Levels
      Key Points
      Producer and End Customer are there in every case
      Zero-level channel is also called direct marketing channel
      Different schemes for consumer marketing and industrial marketing
      MG 220 Marketing Management
    • Channel-Design Decisions
      Analyzing Customers’ Desired service output levels
      Service Outputs by a channel
      Lot Size – number of units a channel permits a user to purchase on one occasion
      Waiting & Delivery time – Avg time customers have to wait for receipt of goods
      Spatial Convenience – Degree of convenience in purchasing a product
      Product Variety – Assortment breadth by a marketing channel
      Service Backup – Add-on services provided by a channel
      Establishing Objectives & Constraints
      Channel objectives should be stated in terms of targeted service output levels
      Channel objectives vary with product characteristics
      Channel design must take into account strengths and weaknesses of different types of intermediaries
      Channel design must also take into account economic environment. For instance, economic depressions lead to cost-cutting thus shorter channels.
      MG 220 Marketing Management
    • Channel-Design DecisionsIdentifying Major Channel Alternatives
      Decisions of choosing from a wide variety of channels for reaching customers
      Elements for describing channel alternative:
      Type of Intermediaries
      Decisions regarding what type of intermediaries shall be used
      Retailers or OEMs
      Number of Intermediaries
      Exclusive Distribution
      Selective Distribution
      Intensive Distribution
      Terms and responsibilities of each channel member
      Price Policy calls
      Conditions of sale
      Distributors’ territorial rights
      Mutual services and responsibilities
      MG 220 Marketing Management
    • Channel-Management Decisions
      After choosing, individual intermediaries need to be trained, motivated and evaluated
      Selecting Channel Members
      Training Channel Members
      Motivating Channel Members
      Channel Power – ability to alter channel members’ behavior
      Coercive Power
      Reward Power
      Legitimate Power
      Expert Power
      Referent Power – how strongly members would like to be associated with the partner
      MG 220 Marketing Management
    • Part 6:Delivering Value
      > Channel integration and systems: SKIM
      > E-Commerce Marketing Practices: SKIM
      > Retailing
      > Private Labels
      > Wholesaling
      > Market Logistics: SKIM
      Class Presentation | Session 26 | 15 Nov 2010