bmgt_411_marketing_managment fall 2014 chris lovett

1. BMGT 411: Chapter 13
Designing and Managing Integrated Marketing Channels

2. Chapter Questions
• What is a marketing channel system and value network?
• What work do marketing channels perform?
• What decisions do companies face in designing, managing, and integrating
their channels?
• What key issues do marketers face with e-commerce and m-commerce?

3. What is a Marketing Channel?
• A marketing channel system is the particular set of interdependent
organizations involved in the process of making a product or service available
for use or consumption.
• The set of pathways a product or service follows after production,
culminating in purchase and consumption of the final end user

4. Path to Supermarket
http://www.youtube.com/watch?
v=CAbFLBM6uHM

5. Channels and
Marketing Decisions
• A 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
• A pull strategy uses advertising, promotion, and other forms of
communication to persuade consumers to demand the product from
intermediaries

6. Push Strategy
Example: Paying for
Shelf Space
http://www.youtube.com/watch?
v=pDxSX-BAs0U

7. Pull Strategy
Example: Advertising
and Branding
Apple iPhone and Carriers

8. Multi-Channel Marketing
• When a single firm uses two or more marketing channels to reach customer
segments
• Ability to order a product online and pick it up at a convenient retail
location
• Ability to return an online-ordered product to a nearby store
• Right to receive discounts based on total online and offline purchases

9. Table 13.1 Channel Member Functions
• Gather information
• Develop and disseminate
persuasive communications
• Reach agreements on price and
terms
• Acquire funds to finance inventories
• Assume risks
• Provide for storage
• Provide for buyers’ payment of their
bills
• Oversee actual transfer of
ownership

10. Figure 13.1 Marketing
Flows

11. Figure 13.2 Consumer
Markets

12. Figure 13.2 Consumer
Markets

13. Figure 13.2 Consumer
Markets

14. Figure 13.2 Consumer
Markets

15. Figure 13.2 Consumer
Markets

16. Figure 13.2 Industrial
Markets

17. Reverse-Flow Channels

18. Designing a
Marketing Channel System
• Analyze customer needs: based on price, product assortment, and
convenience, as well as shopping goals
• Establish channel objectives: Maximizing the desired level of output while
also reducing costs
• Identify major channel alternatives: The types of intermediaries, the number
needed, and terms and responsibilities of each
• Evaluate major channel alternatives: Comparing the costs of each channel
and customer expectations to decide on the best one

19. Identifying Channel Alternatives
! Types of intermediaries:
! Merchants or Retailers: Buy take title of goods and resell
! Example: Mass Market Stores, Grocery Stores, etc
! Agents, Brokers, Sales Agents: Negotiating on the producers behalf,
but not taking ownership of the product
! Travel agencies, Financial Consultants
! Facilitators: Assist in getting the product to market, but do not take
ownership nor assist in the sales
! Trains, Trucking, Warehousing, etc
!
! Number of intermediaries
! Terms and responsibilities

20. Identifying Channel Alternatives
! Number of intermediaries:
! Exclusive: Severely limiting the intermediaries, controlling the service
levels and outputs
! Ex. Product’s like Tiffany, sold only in their stores
! Selective: Gaining adequate market coverage by being selective
about who carries your product
! Ex. Whole Foods Vendors
! Intensive Distribution: Offering product in as many places as
possible, often in convenience goods
! Ex. Soft Drinks

21. Figure 13.3 The Value-
Adds versus
Costs of Different
Channels
C
B
A

22. Channel-Management Decisions
• Selecting channel members: Negative experience at intermediary can cause a
negative reaction at the company
• Training channel members: The power has shifted in most cases from
producers to intermediaries
• Evaluating channel members: Constant evaluation of most profitable
intermediaries, reducing and adding intermediaries by Modifying channel
members over time
• Consolidation of stores
• Shifting to direct selling

23. P&G eStore

24. Different Types of Companies and Intermediaries
• Wal Mart
• Starbucks
• Amazon
• Giant Eagle

25. Channel Conflict (Page 208)
• What types of conflict arise in
channels?
• What causes conflict?
• Goal incompatibility
• Unclear roles and rights
• Differences in perception
• Intermediaries’ dependence on
manufacturer
• What can marketers do to resolve
it?

26. E-Commerce
• Pure Click: No Physical Stores
• Brick and Click: Existing companies adding an online component
• M-Commerce: Selling directly to customers on smartphones and tablets
• Have any of you purchased something on your smartphone?

27. The Limits of Physical
Space

28. eCommerce