1) The document discusses four approaches to studying channels of distribution: institutional, functional, managerial, and strategic. 2) It examines the functional approach which suggests that channel functions can be performed by different players to enhance power or profitability. For example, supermarkets allow customer self-service for cheaper prices. 3) The Internet revolution may fragment existing value chains and shift bargaining power as information monopolies become harder to maintain. This could create new business opportunities and branding challenges for companies.

1. Channel variations...
Four developmental approaches to the study
of channels of distribution in marketing:
Institutional
Functional
Managerial
Strategic
the Internet revolution
Manufacturer Manufacturer Manufacturer
Wholesaler
Jobber
Retailer Retailer
Consumer Consumer Consumer
It is a bit tricky that separation exists
between:
Physical flow of goods, title flow,
payment flow, information flow and
promotion flow.
Marketing objectives Consumer behavior
Other corporate considerations, e.g.
*resources, *image, *existing channels
Financial considerations
Market considerations (geographic)
Product considerations
- replacement rate - gross margin
- adjustment required - search time
Competitor strategies
The Functional approach...
Q: What do channel members do, actually?
A: They add value. Negotiat
ion
h
Researc Warehousing
Promotion
Service
Contact Matching
on
uti
trib
Financin dis
g Risk-taking
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2. The Functional approach...
The functional approach suggests that the
channel functions must be performed by
somebody, but that different players in the
channel can take on these functions to enhance
their power or profitability…
E.g. Supermarkets do not provide the personal
service that corner stores do. But customers
serve themselves so get the groceries cheaper
- selection and wrapping (maybe delivery)
functions are performed by different players.
So, the Institutional approach to
channels can be represented as a series,
and the Functional as a pipeline...
Functions
Channel management This relates
closely relates to
customer retention
and loyalty
In a sense, information is power, although it
is not just the information, it is using the
information that gives power.
Ultimate power in the channel comes from
having the relevant information (about
product/service technology or customers’
needs), hence strong brands are an important
weapon against down-channel consumer
knowledge.
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3. The Internet revolution:
an aside…
At the heart of the revolution is a simple
concept about the economics of information:
Richness The traditional
trade-off
(customization,
interactivity)
Evans &
Wurster, HBR Reach
Internet may also
The Internet revolution
spell doom for linear
channels
Networks make the
“Hyperarchy” possible - indeed,
with Internet, intranet,
extranet hyperarchies are
already fact
1) Existing value chains will fragment into
multiple businesses, each of which will
have its own source(s) of competitive
advantage.
E.G. Car dealerships.
2. Some new businesses will benefit from
network economies of scale, which could
give rise to monopolies. E.G. Internet
telephony, auction sites. First mover
doesn’t have to win (Netscape vs.
Microsoft), but in reaching economies of
scale critical mass is vital.
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4. 3. As value chains fragment and
reconfigure, new opportunities will arise
for purely physical business. Consider
Amazon.com. What is their sustainable
competitive advantage and who will be
the eventual winner in the book
business, do you think?
4. When a company focuses on different
activities, the value proposition underlying
it’s brand identity will change. Consider
retail banking. CA could shift from
ubiquity to performance, or trust. (New
branding opportunities will emerge from
this latter, navigational aspect.)
5.Bargaining power may shift
as a result of radical reduction in the
ability to monopolize information
e.g. retail pricing
6.Customers’ switching costs
may drop, thus companies will have to
find new ways of generating
brand loyalty
7. Incumbents could easily
become victims of their own obsolete
infrastructure and their
own psychology
Switching
costs
Key A/c Relationship Client
Manager strength retention
Perceived Customer
value satisfaction
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5. The Salesperson
Sales Person Sales Costs
Highly educated Hiring
Well-trained Training
Resources Sales Call
o Automobile o $300 - 500*
o Handphone o Sunk costs
o Personal Computer Replace, $50,000*
* Churchill, 1993;
o Expense Account Kotler, Armstrong, 1999
Our research asks two questions:
What are the characteristics of good a/c managers?
Do these characteristics actually predict sales
success?
The Technology Sales Linker
Technology Transfer
Source Utilization
of Transfer of
Knowledge Mechanism Knowledge
(Supplier) (Receiver)
Seller Buyer
Source: Creighton and Denning (1972)
Method of Information Documentation
The Distribution System
Formal Organisation of the User
Selection Process for Projects
Source of FORMAL FACTORS
Knowledge Utilization of
Knowledge
(Supplier)
(Receiver)
INFORMAL FACTORS
Capacity of the Receiver
Information Linkers in Receiving org
Credibility as viewed by Receiver
Perceived Reward to the Receiver
Willingness to be helped
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6. The Opinion leader
“A person
who enhances interpersonal
communication in the exchange of ideas,
transmission of marketplace information
and diffusion of new products or
technology”
The Technology Linker
“An individual or group of individuals who
serve as a link between the source of
knowledge and its application.”
(Creighton and Denning, USN, 1972).
Little further research until 1990’s in Asia:
1996, MBA project, NTU
1996, FYP project, NTU
1997, Ch.13, Business Opps. in Vietnam
2001, Marshall & Reday articles in
Journal of Technology Transfer,
Journal of Euromarketing
Application of TL scale to Motorola and Singtel
Low 8
7
6
Linker 5
Score
4
3
2
High 1
1 2 3 4 5 6 7 8 9 1 2 3 4 5 7 8 9
Singapore Telecom Motorola
1 =Marketing, 2 = Sales, 3 = HRM, 4 = Admin
5 = Finance, 6 = Audit 7 = Information Systems
8 = Engineering 9 = Operations
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7. Research Methods
TSL Scale Items
OL, 5, Established scales
TL
Innovation, 7, (TRI – Parasuraman, 00)
Geocentrism, 4, (I made them up)
Accountability,3, (Barrick & Mount, 98)
TSL
4, (Costa & McCrae, 92)
5, (Costa & McCrae, 92)
5, (Helmreich & Spence 78)
6, (Schwepker, 99)
Sales
Sales Technology Opinion
Proficiency Sales Leadership
Linker
Technology
Linker
Accountability Geocentricism Innovativeness
Respondent Companies
12 multiple-product industries
Services (banking & IT solutions)
Products (electronics and semiconductors)
Business to Business (custom supply chain
management, shipping)
Retail (coms, TV, projection, LCD)
3 independent judges scored
mean of 2.43
Scale 1-7. 1 is high 7 is low technology
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8. Sales
Sales Technology Opinion
Proficiency Sales Leadership
Linker
Moderated Model
Technology
Linker
Accountability Geocentricism Innovativeness
Sales
Sales Opinion
Proficiency Leadership
Non-moderated
Model Technology
Linker
Accountability Geocentricism Innovativeness
The characteristics of a
good sales person?
TSLs TLs
o Persuasive OLs
Innovative
o Competitive Communicator
Geocentric
o Tactful Info Source
Accountable
o Confident
The empirical evidence
about relationships
They are usually managed by teams
Team leaders (KAMs) are usually drawn
from, or quickly become, senior or middle
management
They are usually sales people, but their
role spans typical functional boundaries
(hence, they are often referred to as
“marketing-oriented boundary spanners”)
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9. The
KAM
model
Technical Technical
K
Sales A Buying
centre
M
Finance Finance
Seller Buyer
1) Relational
performance:
“Relational performance contributions describe
activities that are performed by actors in
order to influence other people’s attitudes,
behavior and decisions so that a relationship
with a targeted customer will be developed
and maintained.”
Exchange of information
Searching for appropriate actors
Bringing actors together
Coordinating activities
Getting negotiation results
2) Relational
power sources
“How actors come to control resources that are
needed for effective relationship management.”
Social skills - especially communication,
conflict management skills, flexibility, &
empathy
Network knowledge
The power source relationships portfolio is
an extensive set of good personal
relationships with those in charge of the
relevant resources.
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10. Key findings...
(March last year, Germany, heavy engineering,
chemicals, electronics)
Market share and sales increase when there
is a Relationship Promoter (i.e. KAM) in the
supplier or in the buying company (i.e.
loyalty increases & retention rates improve)
Market share is enhanced further if both
companies have a Relationship Promoter...
Current research at the AUT – still in
progress: Preliminary findings only.
Customer loyalty and retention rate
increases in direct proportion to the
strength of the relationship
Key
activities...
So:
Select the client(s) to become key
account(s)
Select and train an appropriate KAM
Establish who is in the buying center and
what their evaluative criteria are
Establish their satisfaction levels and
monitor them
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