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Channel Management


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Selecting and Managing Marketing Channels. What are the reasons to establish a Marketing Channel. What are the types and causes of Channel Conflict and how it can be resolved.

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Channel Management

  1. 1. Selecting andManaging Marketing Channels<br />AnasIftikhar<br />2815<br />Strategic Marketing Management<br />
  2. 2. 1. What is meant by a marketing channel?<br />A: A marketing channel consists of individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users.<br />
  3. 3. CHANNEL STRUCTURE AND ORGANIZATION<br /><ul><li>Marketing Channels for Consumer Goods and Services
  4. 4. Direct Channel
  5. 5. Indirect Channels</li></li></ul><li>FIGURE: Common marketing channels for consumer goods and services<br />
  6. 6. CHANNEL STRUCTURE AND ORGANIZATION<br /><ul><li>Marketing Channels for Business Goods and Services
  7. 7. Industrial Distributor
  8. 8. Agent</li></li></ul><li>FIGURE 13-4 Common marketing channels for business goods and services<br />
  9. 9. CHANNEL CHOICE AND MANAGEMENT<br /><ul><li>Factors in Choosing a Marketing Channel
  10. 10. Provide the Best Target Market Coverage
  11. 11. Best Satisfy the Target Market’sBuying Requirements
  12. 12. Be the Most Profitable</li></li></ul><li>CHANNEL CHOICE AND MANAGEMENT<br /><ul><li>Factors in Choosing a Marketing Channel
  13. 13. Target Market Coverage
  14. 14. Intensive Distribution
  15. 15. Exclusive Distribution
  16. 16. Selective Distribution</li></li></ul><li>15 | 9<br />Intensity of Market Coverage<br />Intensive Distribution<br />Using all available outlets to distribute a product.<br />Convenience products with high replacement rates<br />Provides availability and reduces search time<br />Availability is more important than outlet type<br />
  17. 17. 15 | 10<br />Intensity of Market Coverage (cont’d)<br />Selective Distribution<br />Using only some available outlets to distribute a product<br />Shopping products and durable goods with low replacement rates<br />High qualification requirements for intermediaries to distribute, sell, service, and support products<br />Toyota’s Only Authorized Dealer<br />
  18. 18. 15 | 11<br />Intensity of Market Coverage (cont’d)<br />Exclusive Distribution<br />Using a single outlet in a fairly large geographic area to distribute a product<br />Expensive, high-quality products purchased infrequently<br />Exclusive outlets provide an incentive to sellers in limited markets<br />Dealers carry complete inventory and have trained staff for sales and service<br />
  19. 19. CHANNEL CHOICE AND MANAGEMENT<br /><ul><li>Factors in Choosing a Marketing Channel
  20. 20. Satisfying Buyer Requirements
  21. 21. Lot Size
  22. 22. Variety
  23. 23. Convenience
  24. 24. Services Backup
  25. 25. Waiting time
  26. 26. Reduction in number of contacts</li></li></ul><li>How a Distributor Reduces theNumber of Channel Transactions<br />1<br />2<br />3<br />4<br />A. Number of contacts <br />without a distributor<br />M x C = 3 X 3 = 9<br />5<br />6<br />7<br />8<br />9<br />= Manufacturer<br />= Customer<br />
  27. 27. How a Distributor Reduces theNumber of Channel Transactions<br />1<br />B. Number of contacts <br />with a distributor<br />M x C = 3 + 3 = 6<br />4<br />Store<br />2<br />5<br />6<br />3<br />= Distributor<br />= Manufacturer<br />= Customer<br />
  28. 28. Wholesaler<br />Retailer<br />Consumer<br />Consumer<br />Conventional Distribution Channel vs. Vertical Marketing Systems<br />Vertical<br />marketing<br />channel<br />Conventional<br />marketing<br />channel<br />Manufacturer<br />Manufacturer<br />Wholesaler<br />Retailer<br />
  29. 29. Channel Conflict <br />What types of conflict arise in channels?<br />What causes channel conflict?<br />What can be done to resolve conflict situations?<br />
  30. 30. What is Channel Conflict?<br />In channel distribution, conflict is not negative, rather, some conflict actually strengthen and improves a channel.<br />“Channel conflict arises when the behavior of a channel member is in opposition, to its channel counterpart. It is opponent centered and direct, in which the goal or object sought is controlled by the counterpart.”<br />Coughlan, Anderson, <br />
  31. 31. Types of Channel Conflict<br />Vertical Channel Conflict - conflict between different levels within the same channel. <br /> Horizontal channel conflict - involves conflict between members at the same level within the channel. <br />Multichannel conflict - exists when the manufacturer has established two or more channels that sell to the same market.<br />
  32. 32. Horizontal and Vertical Conflict in Marketing Channels<br />
  33. 33. Causes of Channel Conflict<br />Goal Incompatibility<br />Unclear Roles And Rights<br />Differences In Perception<br />Intermediaries’ Great Dependence<br />
  34. 34. Managing Channel Conflict<br />Adoption of superordinate goals<br />Exchange persons between channel levels<br />Cooptation<br />Diplomacy, mediation, arbitration for chronic or acute conflict<br />