The document outlines a course on marketing channel concepts, highlighting key assessments, learning objectives, and the importance of distribution strategies in achieving competitive advantages. Students will explore the design and management of marketing channels, address complex channel problems, and understand the role of distribution in the marketing mix. Key themes include the significance of marketing channels, channel strategy formulation, and service output demands in satisfying end-user needs.

1. CourseOverview-Marketing
ChannelConcepts
Lecture1
Part1MarketingChannelSystems
LecturerProfile
v Nigel Bairstow
v B.Bus Marketing, MA Asian Studies and PhD
v Lecturer in International and B2B Marketing
at U.T.S
v Previous employees: 3M , Komatsu, Atlas
Copco and Alcan
v Contact no: 0412 827 230
v Email: [email protected]
AssessmentTasks
Article
Critique
• 15Minute
presentation

2. • Commence
28thMarch
• 5%
ProjectReport
• 15–20
pages
• Due:23rd
May
• 25%
• Industry
Speakers
• Due:6thJune
• 20%
FinalExam
• 2hourexam
plus10
minutes
• Threeessays
andcase
study
• 50%
Reflective
Essay

3. Text
Resource
https://www.b2bwhiteboard.com/
SubjectPrecis
Thissubjectdevelopstheknowledgeandskills
todesign,develop,maintainandmanage
effectiverelationshipsamongworldwide
marketingchannelstoachievesustainable
competitiveadvantagebyusingstrategicand
managerialframesofreference.
CourseRoadmap
CourseObjectives
1. Implementpracticalsolutionstocomplexchannel
problems
2. Applyanalyticalperspectivesanddecisiontools,
whichunderliemanagerialchanneldecisions.
3. Workmoreeffectivelyinteamstodevelop

4. interpersonal,leadershipandcommunicationskills.
4. Presentmoreeffectivelyinaninformalandformal
mannerthefindingsofthegroupwork
components.
LearningObjectives
1. Understandgrowingimportanceofmarketingchannels
2. Definemarketinganddigitalmarketingchannels
3. Howmarketingchannelsrelatetostrategicvariablesin
themarketingmix
4. Theflowsinthemarketingchannelsandtheir
relationshiptochannelmanagement
5. Theprinciplesofspecialization,divisionoflabor,and
contactualefficiency
6. Thedifferencebetweentheconceptsofchannel
structureandofancillarystructure
ShiftingSourceofCompetitive
Advantage
VoiceoftheCustomerandPhysical
Availability

5. KitKatPhysicalAvailabilityJapan
Whythegrowingimportanceof
marketingchannels?
1 Theexplosionofinformationtechnologyand
E-commerce
2 Agreaterdifficultyingainingasustainable
competitiveadvantage
3 Thegrowingpowerofdistributors,especially
retailersinmarketingchannels
4 Theneedtoreducedistributioncosts
AmazonsDistributionCentre

6. StarbuckChannelIssues
FromBeantoCup:Starbucks
StarbucksDigitalPassport
KFCChina–FacialRecognition
KFCFacialRecognition
MarketingMixModel
AppleDistribution
TeslaDistribution

7. TeslaRetailDistribution
ChannelFlows
FiveFlowsinMarketingChannels
MarketingChannelFlows
ProductFlow
NegotiationFlow
OwnershipFlow
InformationFlow

8. PromotionFlow
ContactualEfficiency
GoogleChannelStructure
HistoryofGoogle
Summary
• Wedefinedtheconceptofamarketing
channel
• Welookedathowchannelsworkandwhat

9. functionsandactivitiesareperformedinside
thechannel
• Thechallengeofmulti-channels
• Developananalyticalframeworkforchannel
design,modificationandimplememntation
StrategyinMarke-ngChannels
Lecture5
Part2DevelopingtheMarke-ngChannel
LearningObjec-ves
1. WhatisMarke-ngChannelStrategy?
2. Distribu-onDecisions
3. ChannelStrategy–CorporateObjec-ves
4. ChannelStrategy–Marke-ngMix
5. EmphasisonDistribu-onStrategy
6. Differen-alAdvantageandChannelDesign
7. ChannelStrategy-Selec-ngChannelMembers
8. ChannelStrategy-ManagingtheChannel
9. Mo-va-onofChannelMembers
10. Evalua-onofChannelMemberPerformance
Marketing Channel Strategy
Channel Strategy: the broad

10. principles by which the firm expects to
achieve its distribution objectives for
its target market(s)
1
6 Distribution Decisions for
Firms to Address
1. The role of distribution in the firm’s overall
objectives & strategies
2. The role distribution should play in the marketing
mix
3. The design of the firm’s marketing channels
4. The selection of channel members
5. The management of the marketing channel in
order to implement the firm’s channel design
effectively & efficiently on a continuing basis
6. The evaluation of channel member performance
2

11. 5
MARKETINGCHANNELSTRATEGYAND
ROLEOFDISTRIBUTIONINCORPORATE
OBJECTIVESANDSTRATEGY
6
Channel Strategy as Overall
Corporate Objective
The higher the priority given to
distribution, the higher the level
at which it should be considered
in formulating the organization’s
overall objectives and strategies
3
Determining the Priority Given
to Distribution
Distribution does increasingly warrant
the attention of top management,
because competition has made the

12. issue of distribution too important for
top management to ignore.
Changes in distribu/ve channels may not ma6er much to
GNPandmacroeconomics.Buttheyshouldbeamajorconcern
to every business and industry … Everyone knows how fast
technology is changing. Everyone knows about markets
becoming global and about shiBs in the work force and in
demographics. But few people pay a6en/on to changing
distribu/onchannels. PeterDrucker
Companies that use Distribution
Strategically
• Coca Cola
• Cola-Life
• BMW
• Amazon.com
• Apple Computer
• E-Bay
• Shoes of Prey
CocaCola–CokeOn
• Cokehasanintensive
distribu-onnetwork
• Itgatherspurchasepoints
each-meauserbuysaCoca-
Colabeveragefromavending

13. machine.
• Installedcommunica-on
devicesforCokeONin
vendingmachinesalongside
appdevelopment,making
exis-ngvendingmachines
"smartphone-ready"for
collec-ngpurchasepoints.As
ofApril42016,150,000
smartphone-readyvending
machineswereac-ve.
10
Piggybacking-ColaLife
• ColaLife,anindependentnon-
profitUK-basedagencywith
theideatoleveragethevast
Coca-Colasupplychain
networkinAfricanSub-Sahara.
• Astructural,self-contained
packagingforanan--
diarrhoealkittonestleinto
theunusedspacesurrounding
cratedCoca-Colabo[les.
11

14. BMW'sCustomerDirect
• Ourindustryisfundamentally
changing.Carsinthefuture
willbeautonomous,theywill
beconnected,electric,and
shared,butalsothecustomer
interfaceischanging
massively.Inthepast,wewere
workingwithdealernetworks
tosellcars.Inthefuture,we’ll
belookingmuchmoreatthe
individualcustomerandwhat
thatcustomerneedsduring
theiren-relife-me.“Rainer
Feurer”
Amazon-PopUpStores
• Amazonispoppingupin
malls,WholeFoods,and
Kohl’sacrossAmerica.
• Eachloca-onisstaffedby
Amazonconsultantswho
helpyoufindtheright
devicesandintroduceyou
toAlexa.Plus,learnmore
aboutyourexis-ngdevices
andserviceslikeAmazon
Prime,KindleUnlimited,
Audible,AmazonPrime
Video,andmore.

15. 13
Apple-Store
• Fromitsdirectand
channelpricingstrategy
toitsretailandonline
storefronts,Applesells
itsproductslikeno
othercompanyinthe
consumerelectronics
space.Ifyouknow“the
channel,”youknowthis
isbynomeansaneasy
trick.
14
Ebay-Store
• AneBayStoreprovides
sellersadvancedop-ons
togrowsalesand
maximiseprofitability.
YourowneBayStore
createsacentral
shoppingdes-na-on
that’sexclusivelyforyour
productsandcanbe
customisedtosuityour

16. brand.
15
ShoesofPrey
• ShoesofPreyisa
global,mul--channel
retailbrandthat
enablesshoppersto
designtheirownshoes.
• Theypartnerwith
premiumretailerDavid
Jonesfordistribu-on
16
MARKETINGCHANNELSTRATEGY
ANDTHEMARKETINGMIX
17
Channel Strategy & the Marketing
Mix
The essence of modern marketing
management – to develop an appropriate and

17. complementary marketing mix
1. Product Strategy e.g., quality and benefits
desired)
2. Pricing Strategy (e.g., level of pricing and/or
price points)
3. Promotional Strategy (e.g., the “right”
combination of “push” & “pull” promotion to
apply)
4. Distribution Strategy (e.g., intensity of
distribution)
4
Emphasis on Distribution Strategy
• Distribution is the most relevant variable for
satisfying target market demands.
• Parity exists among competitors in the other
three variables of the marketing mix.
• A high degree of vulnerability exists because
of competitors’ neglect of distribution.
• Distribution can enhance the firm by creating
synergy from marketing channels.
IF:
THEN:

18. or
or
or
The firm should choose distribution
strategy for strategic emphasis
5
Target Market Demand
Firms should stress distribution when it
serves customers’ needs in the target
market.
Marketing channels are so closely linked to
customer need satisfaction because it is through
distribution that firms can provide the kinds and
levels of service that make for satisfied
customers.
Segmen-ngtheMarketbyServiceOutput
Demands

19. • Serviceoutputsclearlydifferen-atetheoffering
ordifferentmarke-ngchannels
• Moreimportantyourtargetmarketwillvalue
serviceoutputsdifferently
• Marketresearchiden-fyingrelevantservice
outputsfortargetmarketimportant
– Delphitechnique
– Focusgroups
– One–on-oneexploratoryinterviews
– Constantsumscales-RESPONDENTisaskedtodividea
par-cularsumamongaseriesofalterna-ves.
ServiceOutputs
• Aframeworkforcodifyingandgeneralising
howtheend-userwantstobuywasproposed
byBucklin(1966)
• Bucklinarguesthatchannelsystemsexistto
reducethe-meitstakesforanend-user
searchforaproduct
• Buckliniden-fiedfourgenericserviceoutputs
andanaddi-onaltwohavebeenadded
ServiceOutputs
q Bucklin
1. Bulk-Breaking

20. 2. Spa-alConvenience
3. Wai-ng-meor
delivery-me
4. Productvariety
q Addi-onal
5.CustomerService
6.Informa-onprovision
These six service outputs cover the major categories
for end-users’ demands for different channel systems
1. BulkBreaking
• Bulkbreaking–referstotheend-usersability
tobuytheirproductorserviceintheirdesired
numberofunitorlotsize
• Differencesinpurchasingandconsump-on
pa[ernsemerge
• Morebulkbreakingresultsinsmallerlotsizes
andahigherprice
BulkBreaking
25
2.Spa-alConvenience

21. • Spa-alConvenience–providedbymarket
decentralisa-onofwholesaleorretailoutlets
increasesconsumersa-sfac-onbyreducing
transporta-onrequirementsandsearchcosts.
3.Wai-ng-me
• Wai-ng-me–isthe-meperiodanend-user
mustwaitbetweenorderingandreceiving
goodsorpostsaleservice.
• Longerwai-ng-me>inconvenience
• Longerwai-ng-me<prices
4.ProductVariety
• Greaterassortmentandvarietyleadsto
higherdistribu-oncostsi.e.Carrymore
inventory
• Varietydescribesgenericallydifferentclasses
ofgoodsmakingaproductoffering
• Assortmentreferstodepthofproductbrands
ormodelswithinagenericproductcategory
5.CustomerService
• Customerservice–referstoallaspectsof

22. erasingtheshoppingandpurchaseprocessfor
end-usersastheyinteractwithsuppliersand
retailers
UberDriverRa-ng
• Uberhassaidthera-ngs
systemisdesignedtohold
itsdriversaccountableand
protectitspassengers,
whichsoundseffec-vein
theory.Butanewstudy
fromNewYorkUniversity
foundthevalueofra-ngs
systemslikeUber’s
decreasesover-me
becausepublicpressureto
giveanotherpersonahigh
ra-ngcon-nuallypushes
theaverageupandupun-l
itbecomesirrelevant.
30
6.Informa-onProvision
• Informa-onprovision–referstoeduca-onof
end-usersaboutproducta[ributesorusage
capabili-esorpre-purchaseandpost-
purchaseservices
• Greaterserviceoutputsdemandedbyend-

23. userswillbemostlikelyinvolve
intermediaries
TABLE2-
5:THESERVICEOUTPUTDEMANDS(SOD)TEMPLATE
SERVICE OUTPUT DEMAND:
SEGMENT
NAME/
DESCRIPTOR
BULK BREAKING SPATIAL
CONVENIENCE DELIVERY/ WAITING TIME
ASSORTMENT/ VARIETY CUSTOMER SERVICE
INFORMATION PROVISION
1.
2.
3.
4.
5.
INSTRUCTIONS:Ifquan-ta-vemarke-ng-
researchdataareavailabletoenternumericalra-
ngsineachcell,thisshouldbedone.Ifnot,
anintui-verankingcanbeimposedbyno-
ngforeachsegmentwhetherdemandforthegivenserviceoutputishig
h,medium,orlow.

24. iPhone
cost structure
lifestyle brand
“High-end”
“Middle”
“Mass
Market”
consumer
prod. & softw.
design
hardware &
softw. dev.
hardware
revenues
iTunes
multimedia
downloads
e-commerce

25. multimedia
rights mgmt
iBook
content
producers
Apple stores
dealer
network
multimedia
revenues
hardware
suppliers
brand
management
hardware
distribution
content
distribution content
APPLE SERVICE DEMAND OUTPUTS
SERVICE OUTPUT DEMAND:
SEGMENT

26. NAME/
DESCRIPTOR
BULK
BREAKING SPATIAL CONVENIENCE DELIVERY/
WAITING TIME ASSORTMENT/ VARIETY CUSTOMER
SERVICE INFORMATION PROVISION
1. High end Low Low High High High
2. Middle Low High Medium High Medium Medium
3. Mass Market Low High Low Low Low Low
INSTRUCTIONS:Ifquan-ta-vemarke-ng-
researchdataareavailabletoenternumericalra-
ngsineachcell,thisshouldbedone.Ifnot,
anintui-verankingcanbeimposedbyno-
ngforeachsegmentwhetherdemandforthegivenserviceoutputishig
h,medium,orlow.
High
Mee-ngServiceOutputDemands
• Basicpremiseisthatthemarketermust
iden-fyandmeetthedemandsofend-users
• Inamarke-ngchannelstrategycontextit
involves:
– Crea-ngandrunningamarke-ngchannelsystem
– Producesserviceoutputsdemandedbytargeted

27. end-usersegments
Competitive Parity
Distribution advantages are not easily
copied by competitors.
Distribution advantages are based on a
combination of superior strategy, organization,
and human capabilities.
Caterpillar
• Engineeringexcellence
isnotenough
• Need“True
Partnershipswithyour
Dealers”
• Caterpillarsdistribu-on
networkishardto
duplicateby
compe-tors
39

28. Distribution Neglect
Competitors’ neglect of distribution
strategies provides excellent opportunities.
The channel manager must analyse target
markets to determine whether competitors have
neglected distribution and whether
vulnerabilities exist that can be exploited.
Distribution and Synergy
“Hooking up” with a mix of cooperative
channel members will strengthen the
channel.
Because each channel member is an
independent entity, rewarding opportunities exist
for channel managers to cultivate cooperation
among members.
CHANNELSTRATEGYAND
DESIGNINGMARKETINGCHANNELS

29. 42
Differential Advantage
& Channel Design 6
Differential advantage: Also
called sustainable competitive
advantage, occurs when a firm
attains a long-term, advantageous
position in the market relative to
competitors.
44
Intensity Level Objective Number of Intermediaries
Intensive
Selective
Exclusive
Achieve mass market
selling.

30. Convenience goods.
Work with selected
intermediaries.
Shopping and some
specialty goods.
Work with single
intermediary. Specialty
goods and industrial
equipment.
Many
Several
One
Levels of Distribution Intensity
Levels of Distribution Intensity
Positioning the Channel
A firm that plans the channel and
makes decisions by viewing the
relationship with channel members as

31. a partnership or strategic alliance
that offers recognizable benefits to
the manufacturer & channel
members on a long-term basis
Positioning the Channel
… the reputation a manufacturer
acquires among distributors [channel
members] for furnishing products,
services, financial returns, programs,
and systems that are in some way
superior to those offered by competing
manufacturers.
Narus and Anderson
Lexus Covenant
49

32. CHANNELSTRATEGYANDTHE
SELECTIONOFCHANNELMEMBERS
50
Selection of Channel Members
Because customers perceive channel members as
an extension of the manufacturer’s own
organization, members should:
• Reflect channel strategies the firm has developed to
achieve its distribution objectives
• Be consistent with the firm’s broader marketing
objectives & strategies
• Reflect the objectives & strategies of the
organization as a whole
7
RolexRetailers
• Rolexiscarefulabout
selec-ngthemost
reputableretaildealers
• Useselec-ve
distribu-on

33. • Mostbeabletoprovide
superiorselec-on,
serviceandwarranty
provisionthat
customersexpect
52
CHANNELSTRATEGYANDMANAGING
THEMARKETINGCHANNEL
53
Channel Strategy & Managing the
Channel
How
close a relationship
should be developed
with the channel
members?
How should the channel
members be motivated to cooperate
in achieving the manufacturer’s
distribution objectives?
How should the
marketing mix be used

34. to enhance channel
member cooperation?
8
3
Strategic
Questions
CHANNELSTRATEGYANDTHE
EVALUATIONOFCHANNELMEMBER
PRFORMANCE
55
Evaluation of Channel Member
Performance
Have provisions been made in the design and
management of the channel to assure that
channel member performance will be
evaluated effectively?
Channel manager’s involvement
in evaluating member performance is integral to

35. developing & managing channel
10
Summary
• Channel strategy refers to the broad principles
by which the firm expects to achieve its
distribution objectives to its target market
• Channel Strategy is relevant to all six of the
distribution decisions
1. The role of distribution
2. The role of distribution in the marketing mix
3. The design of the marketing channel
4. Selection of channel members
5. Management of the channel
6. Evaluation of channel member performance
57
ChannelPar*cipants
Lecture2
Part1Marke*ngChannelSystems
LearningObjec-ves

36. 5
3MPost-It
3
SAPforWholesaleDistribu*on
ChannelSurfingQues-on1
YouareanewChannelManagerforacompanythatis
amarketleaderforLaserprinters
YouhavedecidedtocutyourWholesaler’svolume
rebatefrom5%to3%perannumwithoutanyprior
consulta*on
YourWholesalerisaachievingaminimumGM%of3%
forthesaleofprinters.
Ques*on:WhatwouldtheWholesalerslikelyreac*on
be?

37. 10
PharmabrokerSales
12
KomatsuBranchOffices
ANZSICWholesaleCodes
15
Over60
classifica*ons
Startswith3000

38. 5
MiniCase1–ToysRUsFilefor
Bankruptcy
23
Ques*on
1. WhatfactorshaveledtoToysRUshavingto
fileforbankruptcy?
2. Whatcompe*torfactorshaveledtotheir
situa*on?
3. HowwouldrestructuretheirChannel?
RetailingDefini-on

39. Retailisthesaleofgoodstoendusers,notfor
resale,butforuseandconsump*onbythe
purchaser.Theretailtransac*onisattheendof
thesupplychain.Manufacturersselllarge
quan**esofproductstoretailers,andretailers
a^empttosellthosesamequan**esof
productstoconsumers.
25
RetailDisrupted:Deloi^eDigital
26
27
Kind-of-BusinessClassifica-ons
• Motor vehicle & parts
dealers
• Furniture & home
furnishings stores
• Electronics & appliance
stores

40. • Building material & garden
equip. & supply dealers
• Food & beverage stores
• Health & personal care
stores
• Gasoline stations
• Clothing & clothing
accessories stores
• Sporting goods, hobby,
book, & music stores
• General merchandise
stores
• Miscellaneous store
retailers
• Non store retailers
Retail Trade
AmazonsWaveofDisrup-on
29
30

41. TopTrends2018
31
8
MiniCase2–Bunning’sDisaster
inUKhardwarepush
34
Ques*on
1. WhatcontributedtoBunningfailureinthe
UKMarket?
2. WhatmeasuresshouldBunning’staketo
rec*fytheirmistakes?
3. WhatlessonscanwelearnfromBunning’s
failedentryintoUKmarket?

42. 9
RetailTrendsandPredic-ons2018
1. Choreshoppingwillbecomeeasier
2. Retailerswillenableshopperstobuildandcustomize
products
3. Retailerswillincreasinglyreplyonrobots
4. Retailerswillstepuptheirsocialmediastrategies
5. Datawilldriveretaildecisions
6. Augmentedrealitytechnologywillgetsophis*cated
7. Bricksandmortarstoreswillcon*nuetoflourish
8. Healthyandenvironmentfriendlylifestyles
9. Inhomeservicesanddelivery
10. Retailersthatcurateassortmentswillwin
39
Facilita-ngAgenciesinMarke-ng
Channels
• Transportation agencies
• Storage agencies
• Order processing agencies
• Advertising agencies
• Financial agencies
• Insurance companies

43. • Marketing research firms
ChannelSurfingQues-on2
“Anounceofgood
measurementiswortha
poundofmiddlemanrebuff
salesfluff?
41
Summary
• Manytypesofpar*espar*cipateinthe
marke*ngchannel
• Producersandmanufacturerslackeconomies
ofscaleandscopetodistributetheirproducts
directly.
• Theyrelyonwholesalersorretailersas
facilita*ngagenciestoshareinthe
performanceofdistribu*ontasks.
CHAPTERProductandPricingIssuesin
ChannelManagement
Lecture8

44. Part2DevelopingtheMarkeAngChannel
LearningObjecAves
1. TheimportanceofNewProductPlanningand
ChannelManagement
2. TheProductlifecycleandChannelManagement
3. TheimportanceofStrategicproduct
management
4. TheTradingdown,TradingUpinChannel
Management.
2
Marketing Mix Resources
By understanding how the other marketing
mix variables interface with the channel
variable, and the implications of such,
the channel manager could coordinate all
strategic components to create the synergy needed
to meet customers’ needs.

45. 1
Product-Channel
Management Interfaces
3
Major
areas of
product
Management
New product planning
& development
Strategic Product
Management
The Product Life Cycle
2
New Product Planning
1. What input, if any, can channel members provide
into new product planning?
2. What has been done to assure that new products
will be acceptable to the channel members?

46. 3. Do the new products fit into the present channel
members’ assortments?
4. Will any special education or training be necessary
to prepare the channel members to sell the new
products effectively?
5. Will the product cause the channel members any
special problems?
3
Encouraging Member Input
Solicit ideas for
new products.
Solicit feedback
during the test-marketing
or commercialization stage.
Gather feedback
on product size
or on packaging.
Member Acceptance of
New Products
Factors that pre-determine acceptance of new

47. products by channel partners:
• How the product will sell – “Turnover”
• Whether the product is easy to stock & display
• Whether the product will be profitable – “Margins”
Adding Products to the Assortment
Will existing channel members view the new product as
appropriate to add to their assortments?
Will channel members feel competent
to handle the new product?
Educating Channel Members
Manufacturer
goal:
To sell new products
successfully
Method:
Educate or train

48. channel members in the
product’s use and the
special features to
emphasize in sales
presentations
10
Trouble-Free New Products
New product problems
Care in new product
planning
=
AppleProductRoadmap
12
Product Life Cycle
Introduction
Growth

49. Sales
($)
Sales curve
Maturity
Profit curve
Time
Decline
4
Introduction
1. Assure sufficient number of channel
members for adequate market coverage
2. Assure adequate supply on channel
members’ shelves
Growth
1. Assure sufficient number of channel member
inventories for adequate market coverage
2. Monitor the effects of competitive products

50. on channel member support
Maturity
1. Extra emphasis on motivating channel members
to mitigate competitive impact
2. Investigate possibility for changes in channel
structure to extend maturity stage & possibly
foster new growth stage
KiwiOnline
17
KiwiSoccerAd
18
Decline
1. Phase out marginal channel members
2. Investigate impact of product deletion
on channel members

51. CrossingChasm
CH
A
SM
Chasm Group
κ
Early
Market
Bowling
Alley
Tornado
MainStreet
κ compe;;veadvantage
fixabrokenbusinessprocess
developchannel/opera;onsinfrastructure
getbeCervalue
Techies Visionaries Pragma;sts Conserva;ves Scep;cs
Strategic Product Management

52. Successful Product Strategies:
• Product quality, innovativeness, or technological
sophistication
• Capabilities of managers overseeing product line
• Firm’s financial capacity & willingness to provide
promotional support
• Channel members’ role in implementing product
strategies
5
Product Strategies
6
Product differentiation
Product positioning
Product line expansion & contraction
Trading up & trading down
Product brand strategy
Product Differentiation
Creating a differential product involves getting

53. consumers to perceive a difference.
Implications for channel management:
• Channel managers should try to select & help develop
members
who fit the product image when product differentiation strategy
is
affected by who will be selling the product.
• Channel managers should provide retailers with the kind of
support
needed to properly present the product when this strategy is
influenced by how the product is sold at retail.
DifferenAaAonTest
24
FindyourPurpleCow
25
Product Positioning
The manufacturer’s attempt to have consumers
perceive the product in a particular way relative to

54. competitive products
Implications for channel management:
• Possible interfaces between the product positioning strategy
and where the product will be displayed and sold to consumers
should be considered before the strategy is implemented.
• Elicit retailer support before attempting to implement
strategy.
• Maintain backup supply of retailer incentives
BrandPosiAoning
27
Product Line Expansion & Contraction
Manufacturers often engage in both
expansion and contraction simultaneously.
Implications for channel management:
• Difficult to balance channel member satisfaction & support
for
reshaped product lines
• Channel members are making increasing demands on
manufacturers

55. to have the right mix of products
Trading Down, Trading Up!
Adding lower-priced products or product lines,
or higher-priced products or product lines,
to a product mix
Implications for channel management:
• Whether existing channel members provide adequate coverage
of high-end or low-end market segments to which trade-up or
trade-down product is aimed
• Whether the channel members have confidence in the
manufacturer’s ability to successfully market the trade-up or
trade-down product.
When manufacturers sell under both national and
private brands, direct competition with channel
members may result
Product Brand Strategy
Implications for channel management:

56. • Do not sell both national & private brand versions of products
to
the same channel members.
• Sell national and private brand versions in different
geographical
territories.
• Physically vary products enough to minimize direct
competition
32
PowerofBrands
33
Product Service Strategy
It is the role of the marketing channel to
provide necessary service along with the
product to the final user
Manufacturers should provide after-sale service:
• by offering it directly at the factory

57. • through their own network of service centers
• through channel members
• through authorized independent service centers
• by some combination of the above
7
Summary
• Effective Channel management requires that the
channel manager be aware be aware of how
channel management interfaces with the other
variables of the marketing mix.
• Examined the strategic interface between
product management and channel management
• Product life-cycle implications for channel
manager important
• Strategic viability of product lines important to
remain viable and profitable
35
CHAPTERPricingIssuesinChannel
Management
Lecture8
Part2DevelopingtheMarkeAngChannel

58. LearningObjecAves
1. Theimportanceofpricingtochannelstrategy
2. Anatomyofchannelpricingstructure
3. Influencingpricingstrategy
4. Channelpricingguidelines
5. Caveattopricingguidelines
6. Otherchannelpricingissues
37
The Importance of Pricing
Pricing decisions cause top-level marketing
executives more concern than any other
strategic marketing decision area.
Pricing is viewed as
having a more direct
link to the firm’s bottom
line.
1

59. Anatomy of Channel
Pricing Structure
Channel participants each
want a part of the total price
sufficient to cover their
costs and provide a
desired level of profit.
2
The “Golden Rule”
of Channel Pricing
It is not enough to base pricing decisions solely on
the market, internal cost considerations, and
competitive factors. Rather, for those firms using
independent channel members, explicit consideration
of how pricing decisions affect channel member
behavior is an important part of pricing strategy.
Pricing decisions can have a
substantial impact

60. on channel member performance.
GrossMargin
41
DifferenceBetweenMarginand
Markup
42
Example
43
Influencing Pricing Strategy
The major challenge for the channel manager:
To help foster pricing strategies that
promote channel member cooperation and
minimize conflict

61. 3
Channel Manager’s Role
Major areas of
consideration in a
manufacturer’s pricing
decision
Internal
cost
considerations
Channel
considerations
Competitive
considerations
Target
market
considerations
Channel manager must
focus
on the channel
considerations

62. and work to incorporate
them
into the firm’s pricing
decisions
Channel Manager’s Role
To find out about channel member
views
and to appraise their
effects on channel
member performance
Channel Manager’s Role
Have
channel members’
viewpoints on pricing issues included as
an integral part of the manufacturer’s
price-making process
Such action anticipates
and hopefully avoids problems

63. that may arise after pricing
decisions have
taken effect
MarketLeader
DistribuAoninplace
Pricemainweapon
Premiumprice
VarietyofopAons
MarketNiche
Staywithmarkets
Addniches
Premiumprice
SelecAvedistribuAon
MarketChallenger
Focusonflanks
Directorindirectaack
MarketFollower
‘Cloning’
Setlowerprices
Price and Distribution Strategies
Channel Pricing Guidelines

64. 1. To help those involved in pricing decisions
to focus more clearly on the channel
implications of their pricing decisions
2. To provide general prescriptions on how to
formulate pricing strategies that will help
promote channel member cooperation and
minimize conflict
4
Profit Margins
Guideline #1: Each efficient reseller must
obtain unit profit margins in excess of unit
operating costs.
Channel members who believe that the
manufacturer is not allowing them sufficient
margins are likely to seek out other suppliers
or establish and promote their own private
brands.
Different Classes of Resellers
1. Do channel members hold inventories?

65. 2. Do they make purchases in large or small quantities?
3. Do they provide repair services?
4. Do they extend credit to customers?
5. Do they deliver?
6. Do they help train the customers’ sales force?
Guideline #2: Each class of reseller margins
should vary in rough proportion to the cost of
the functions the reseller performs.
Guideline #3: At all points in the vertical chain
(channel levels), prices charged must be in line
with those charged for comparable rival brands.
Channel managers should attempt to weigh any margin
differentials between their own and competitive brands in
terms of what kind of support their firms offer and what
level of support they expect from channel members.
Rival Brands
The margin structure should reflect any changes in
the usual allocation of distribution tasks
between the manufacturer and the channel

66. members.
Special Arrangements
Guideline #4: Special distribution arrangements,
variations in functions performed or departures
from the usual flow of merchandise should be
accompanied by corresponding variations in
financial arrangements.
Exceptions are possible if they can be justified in the
eyes of the channel members. However, it is the
job of the channel manager to attempt to explain
to the channel members any margin changes that
deviate downward from the norm.
Conventional Norms in Margins
Guideline #5: Margins allowed to any type of
reseller must conform to the conventional
percentage norms unless a very strong case
can be made for departing from the norms.
Channel members are often amenable to accepting

67. the lower margins associated with promotional
products so long as they are convinced of the
promotional value of the product in building
patronage.
Margin Variation on Models
Guideline #6: Variations in margins on individual
models and styles of a line are permissible and
expected. However, they must vary around the
conventional margin for the trade.
Price points are specific prices, usually at the retail
level, to which consumers have become
accustomed. Failure to recognize retail price points
can create problems for the manufacturer as well
as its channel members if consumers expect to
find products at particular price points and such
products are not offered.
Price Points
Guideline #7: A price structure should contain
offerings at the chief price points, where such
price points exist.

68. Amazon Pricing Model – Why
Amazon Hide its Cheapest Price
57
If the price differences are not closely associated
with visible or identified product features, the
channel members will have a more difficult selling
job.
Product Variations
Guideline #8: A manufacturer’s price structure
must reflect variations in the attractiveness of
individual product offerings.
Guideline Caveat
Particular circumstances and situations exist
in which the prior guidelines will not apply or
will be irrelevant.
5

69. Other Channel Pricing Issues
Exercising control in channel pricing
Changing price policies
Passing price increases through the channel
Using price incentives in the channel
Dealing with the gray market & with free riding
6
Exercising Control in Pricing
Because channel members typically view pricing
as the area over which they have total control. . .
First: Rule out any type of coercive approaches
to controlling channel member pricing policies.
Second: The manufacturer should encroach on the
domain of channel member pricing policies only if

70. the manufacturer believes that it is in his or her
vital long-term strategic interest to do so.
Third: If the manufacturer believes that it is necessary to
exercise some control over member pricing, he or she
should do so through “friendly persuasion.”
Channel members fear such changes because they have
become accustomed to the strategy, or their own pricing
strategies may be closely tied to those of the manufacturer.
Changing Price Policies
Changes in
manufacturer pricing policies
or related terms of sale cause
reactions among
channel members.
First: Manufacturers should consider the long- and the

71. short-term implications of such increases versus
maintaining the current prices.
Second: Manufacturers should do whatever possible if
passing on the price increase is unavoidable.
Third: Manufacturers could change their strategies in
other areas of the marketing mix to help offset
the effects of such increases.
Passing Price Increases Through
the Channel
Strategies for channel members to use in order
to avoid simply passing along price increases
through the channel:
Possible
Solution
s:
• Make pricing promotions as simple and
straightforward as possible.

72. • Design price-promotion strategies to be at least as
attractive to retailers as they are to consumers.
Manufacturers face difficulties gaining strong
retailer acceptance and follow-through on
pricing promotions.
Using Price Incentives
in the Channel
Channel design decisions that result in closely
controlled channels and selective distribution as well as
changing buyer preferences may help limit the growth
of the gray market and free riding.
Gray Market
The sale of brand-name products at

73. very low prices by unauthorized
distributors or dealers
Gray Market & Free Riding
66
Summary
• PricingStrategyshouldnotonlyincorporatenotonly
internalcost,targetmarketandcompeAAve
consideraAonsbutalsochannelconsideraAons.
• SomeAmesthemanufacturerspricingstrategyis
overlooked.
• Manufacturerspricingstrategymustbecongruent
withchannelmembersintereststoachieveahighlevel
ofcooperaAon.
• Channelmanagermustensurechannelmembersare

74. rewardedforchannelflowstheyperform.
• Adequatemarginforchannelmembersisimportant
67
CHAPTER
DesigningMarketingChannels
Lecture6
Part2DevelopingtheMarketingChannel
LearningObjectives
1. Channeldesign
2. Whoengagesinchannel
3. Channeldesignparadigm
4. Whentomakeachanneldesigndecision
5. Distributionobjectives
6. Distributiontasks

75. 7. Channelstructuredecisions
8. Variablesaffectingchanneldesigndecisionsandgap
analysis
9. Heuristicsinchanneldesign
10. Choosingtheoptimalstructure
2
Channel Design
Channel Design: Decisions
involving the development of new
marketing channels either where
none had previously existed or to
the modification of
existing channels
1

76. Channel Design
1. A decision made by the marketer
2. The creation and modification of channels
based on identifying gaps.
3. The active allocation of distribution tasks in an
attempt to develop an efficient structure
4. The selection of channel members
5. A strategic tool for gaining a differential
advantage
Distinguishing points of the definition include:
Who Engages in Channel Design?
• Producers,

77. manufacturers, service
providers, franchisors
• Look down the
channel
toward the market
• Look up the
channel
to secure
suppliers
• Look both up
and
down

78. the channel
Firms Wholesalers
Retailers
2
Channel Design Paradigm
1. Recognize the need for
channel design decision
7. Select
channel members
5. Evaluate
relevant variables and Gaps
6. Choose the “best”
channel structure
2. Set & coordinate

79. distribution objectives
3. Specify
distribution Flow tasks
4. Develop alternative
channel structures
3
PHASE1:
RECOGNISETHENEEDFORACHANNEL
DESIGN
7
When to Make a Channel
Design Decision
• Developing a new product or product line

80. • Aiming an existing product at a new market
• Making a major change in some other component
of the marketing mix
• Establishing a new firm
• Adapting to changing intermediary policies that
may inhibit attainment of distribution objectives
4
When to Make a Channel
Design Decision
• Dealing with changes in availability of particular
kinds of intermediaries
• Opening up new geographic marketing areas
• Facing the occurrence of major environmental
changes

81. • Meeting the challenge of conflict or other
behavioral problems
• Reviewing and evaluating
PHASE2:
SETTINGANDCOORDINATING
DISTRIBUTIONOBJECTIVES
10
Distribution Objectives
Setting distribution objectives
requires knowledge of which,
if any, existing objectives
& strategies may impinge

82. on these distribution objectives.
5
Setting Explicit Objectives
Dell Computer………
Our growth strategy involves reaching more
customers worldwide through new distribution
channels such as consumer, retail, expanding
our relationships with value added resellers,
and augmenting select areas of our business
through targeted acquisitions
12
Pharma Vending
13

83. The Need for Congruency
Firm’s
overall
objectives
&
strategies
General
marketing
objectives &
strategies
Pricing

84. marketing
objectives &
strategies
Product
marketing
objectives &
strategies
Promotion
marketing
objectives &
strategies
Distribution
marketing

85. objectives &
strategies
PHASE3:
SPECIFYINGDISTRIBUTIONFLOWTASKS
15
Distribution Flow Tasks
Outlining distribution flow tasks is specific
and situationally dependent on the firm.
For example: Distribution flow tasks for a
manufacturer of consumer products
differs from those for products sold

86. in industrial markets.
Distribution tasks are a function of the distribution
objectives and the types of firms involved.
=
6
ChannelFlows
• Specificchannelmembersmayspecialisein
performingoneormoreflowsbutmaynot
participateatallintheperformanceoftheother
flows.
• Furtheritmaybetemptingtoremoveachannel
memberfromthechannel.
• Example.HPhaveaRepthatcallsdirectlyonamajor
corporateaccountbutthatsamecorporateaccount

87. isalsobeingservicedbyaValueAddedReseller.
• Everyflownotonlycontributestotheproductionof
valuedserviceoutputsbutisassociatedwithacost.
Importance of Channel Flows
Distributionchannelmemberssuchas
producers,intermediaries,andconsumers
assumesomecoststoperformmarketing
flows.
Thebasicassumptionisthataproducercan
addoreliminatemembersofachannelin
ordertoreachthefinalconsumer,butthe
marketingflowscannotbeeliminated.
THEEIGHTGENERICCHANNEL
FLOWS
19

88. 20
MARKETING FLOWS IN CHANNELS
Physical Physical Physical
Possession Possession Possession
Ownership Ownership Ownership
Promotion Promotion Promotion
Negotiation Negotiation Negotiation Consumers
Producers Wholesalers Retailers Industrial
Financing Financing Financing and
Household
Risking Risking Risking
Ordering Ordering Ordering

89. Payment Payment Payment
CommercialChannelSubsystem
Thearrowsaboveshowflowsofactivityinthechannel(e.g.physicalpo
ssession
flowsfromproducerstowholesalerstoretailerstoconsumers).Eachfl
owcarriesa
cost.Someexamplesofcostsofvariousflowsaregivenbelow:
21
MARKETING FLOWS IN CHANNELS (CONTINUED)
MarketingFlow

90. CostRepresented
Physicalpossession
Storageanddeliverycosts
Ownership
Inventorycarryingcosts
Promotion
Personalselling,advertising,salespromotion,
publicity,publicrelationscosts
Negotiation

91. Timeandlegalcosts
Financing
Creditterms,termsandconditionsofsale
Risking
Priceguarantees,warranties,insurance,repair,and
after-saleservicecosts
Ordering
Order-processingcosts
Payment

92. Collections,baddebtcosts
22
FlowtobePerformed:
ExamplesofIntermediariesWhoCanPerformFlow:
PhysicalPossession
Contractwarehouse
Shippingcompany(e.g.FederalExpress,UPS,airfreight)
Distributor
Retailers(includingbricksandmortar,catalog,online)
Ownership

93. Contractwarehouse
Distributor
Retailers(includingbricksandmortar,catalog,online)
Promotion
Distributor
Independentsalesrepresentative
Broker
Retailers(includingbricksandmortar,catalog,online)
Franchisees
Negotiation
Distributor
ExportMarketingCompany
Independentsalesrepresentative
Financing
Distributor
Broker

94. Retailers(includingbricksandmortar,catalog,online)
Creditcardcompany
Banks
Franchisees
Risking
Distributor
Retailers(includingbricksandmortar,catalog,online)
Creditcardcompany
Franchisees
Ordering
Distributor
Independentsalesrepresentative
Retailers(includingbricksandmortar,catalog,online)
Franchisees
Payment
Distributor

95. Shippingcompany(e.g.Schneider)
Retailers(includingbricksandmortar,catalog,online)
Franchisees
MAPPING FROM FLOWS TO BE PERFORMED
TO APPROPRIATE INTERMEDIARY CHOICES
Physical Possession - Ownership
• Ownertakestitleofgoods
• Bearsthecostofcarrytheinventory
• Capitalistiedupinproduct
• Physicalpossessionandownershipcommonly
movetogether
• Exceptionconsignmentselling

96. Promotion
• Promotionalactivitiesoperateat
– AboveandBelowthelineadvertisingactivity
– End-userpullthrough
• Sellingbyanemployee
• Outsidesalesforce(brokersandregistered
investmentadvisors)
• Third-partyreverselogistics-refurbished
products
Negotiation
• Occurswhenevertermsoftradeofsaleorof
themaintenanceofanongoingrelationship
arediscussedanddecided.
• measuredincostofpersonneltimespentin
negotiating

97. Channel Video – Chinese / Indian
Negotiation
Clicktoplayvideo
http://www.youtube.com/watch?v=f07FDFJf1k4
29
Financing
• Costsareinherentinthetermsofsalefrom
onelevelofthechanneltoanotheror
• Thechanneltotheend-user
• Paymentterms,discountforearlypayment

98. Channel Video
Gettingpaid
Clicktoplayvideo
https://www.youtube.com/watch?v=d1Uvg35icgg
32
Risking
• Manysourcesofrisking
– Long-termcontractslockindistributortoend-
user
– Nopriceprotectionforpartners

99. – Vendorstrytomitigatetheirriskondistributors
• Passonaftersalesservice
• Limitwarranties
• Channelstuffing
Channel Video
Importanceofpriceprotection
Clicktoplayvideo
https://www.youtube.com/watch?v=72N1CPfwCco
35
Channel Video

100. Channelstuffing
Clicktoplayvideo
https://www.youtube.com/watch?v=9bNRRa-tb_A
37
OrderingandPaymentFlows
• Doesthedistributororderfromvendor
direct?
• Orordersdirectfromvendorsfactory
overseas
– Quickshiplogistics
– Automatedreorderingsystems

101. Channel Video
Quickshiplogistics
Clicktoplayvideo
https://www.youtube.com/watch?v=xpqr-m5_hTQ
40
CHAPTER
Whyisitimportantnotto
performnecessarilyhigh
levelsofchannelflows?
CustomisingtheListofFlows

102. • Itisimportanttoknowwhento
– Customisechannelflows
– Combinechannelflows
– Expandaflow
• Promotionalflowmayconsistof
– Costofrunningasalesforce
– Costofrunningadvertisements
– Costofrunningpublicrelations
Whodoeswhatchannelflows?
• Crucialoncechannelflowsaredescribedmust
measureallcostsincurred
• Mustrewardcostlychannelflowperformance
bychannelmembers
• Whatchannelflowschannelmembersare
involveinarenotobvious

103. Describingthecurrentchannelwith
theEfficiencyTemplate
• Itmeasuresthecostsborneandvalueadded
bychannelmembersinachievingchannel
performance
• Apracticalapplicationoftheefficiencymodel
isdescribedonthenextslide
TheChannelEfficiencyModel
• Torevealhowtheflowscostsareshared
amongchannelmembers.
• Toexplainhowmemberscontributetothe
addedvalueofthewholechain.
• Toascertaintheflows’importancetothe
channel.

104. • Asapowerfultooltoexplaintheactual
channelperformanceandjustifychangesthat
companiesshouldmake.
UseofEfficiencyTemplatedescribes
1. Thetypesandamountsofworkdonebyeach
channelmemberintheperformanceof
channelflows
2. Theimportanceofeachchannelflowtothe
provisionofthedemandedconsumerservice
outputs.
3. Theresultingshareofchannelprofitsthat
eachchannelmembershouldreap
47

105. ChannelManagermust
Goal
• Minimisecostofrunningthe
distributionchanneltopreserve
profitmargins
Challenge
• Ensureenoughisspenton
performingthechannelflowsto
guaranteethegenerationof
desiredserviceoutputs
• Poordecisionsonhowtospend
moneyrunningthechannelwill
resultinlowprovisionofservice
outputs
• Competitorstakeadvantagein
holesinserviceoutputprovisions

106. • Spendingtomuchwillcreate
higherserviceoutputcoststhat
arerequired.
PHASE4:
DEVELOPINGALTERNATIVECHANNEL
STRUCTURES
50
Channel Structure Dimensions
Allocation Alternatives
7
3. Types of
intermediaries at each

107. level
1. Number of levels in
the channel
2. Intensity at the
various levels
Number of Levels
• Range from two to five or more
• Number of alternatives is limited to
two or three choices
• Limitations result from the following
factors:
ü Particular industry practices
ü Nature & size of the market
ü Availability of intermediaries

108. Intensity at the Various Levels
Intensive Selective Exclusive
Many Few One
Intensity Dimension
Numbers of Intermediaries (retail level)
Relationship between the intensity of
distribution dimension & number of retail
intermediaries used in a given market area.
Intensivedistribution
• Meansthatabrandcanbepurchasedthrough
manyofthepossibleoutletsinatradingarea

109. (atsaturationeverypossibleoutlet).
• Moreintensivelessthemanufacturercan
influencechannelmembersperformingflows
• Coversmanytransactionalproducts
Intensive Distribution
The Australian Financial Review: Case Studies with Business
News. (2007). McDonald’s :Addressing changing food values
(4 ed.) [Case Study]. Sydney, New South Wales :
SelectiveDistribution
• Meansmarketcoverageinwhichaproductis
distributedthroughalimitednumberof
wholesalersorretailersinagivenarea
• Usedinretailfacilities,whereresourcesor
imagemayhaveanimpactonconsumer

110. impression
• i.e.LVMH,RoyalCanin
LVMHATAGLANCE
Worldleaderinluxury
brands.
Total2008revenue:17.2
billioneuro's.
77,000employeesworldwide.
Arecentgroup(createdin
1987)thatisconstantly
expanding.
Aninternationalretail
networkofmorethan2,300
stores.

111. RoyalCanin
• Beganin1996-HenriLargarde
• 18%MarketshareinEurope
• Distribution–soldtobreeders
• Switchedtohypermarketsand
wasnotsuccessfulbrandnot
wellpresented
• Early1990sswitchedtoselling
throughspecialityoutlets:garden
stores,petdepartmentsaswellas
petstores
• Resulthighmargins,fastgrowth
andmarketshare
ExclusiveDistribution
• Meansabrandcanbepurchasedthroughone
channelpartnerinatradingarea
• Usefulinearlystagesofdistribution
evolvement

112. • Mayhavelimitedcoverage
• Allowsforfocus
• Powercanshifttoexclusivepartner
• i.e.ExamplesofsuchproductsincludeRolexwatches,Gucci
bags,Regalshoes,Celineneckties,andMarkCrosswallets
FerrariDealer
Network
Therearefiveauthorised
Ferrarishowroomsandafter-
salesfacilitiesinAustralia
Manyoftheauthorised
networkofFerrariDealers
haveenjoyedalengthy
partnershipwiththeFerrari
marquee
Types of Intermediaries

113. • Numerous types
• Manager’s emphasis on types of
distribution tasks performed by these
intermediaries
• Watch emerging types
– Electronic online auction firms (eBay)
– Industrial products sold in B2B markets
(Chemdex, Converge.com)
PHASE5:
EVALUATINGTHEVARIABLESTHATIMPACT
CHANNELSTRUCTUREANDCONDUCTGAP
ANALYSIS
62
Variables Affecting Channel Structure
8

114. 1. Market Variables
2. Product Variables
3. Company Variables
4. Intermediary Variables
5. Environmental Variables
6. Behavioral Variable
Categories of Variables
Market Variables
Market Geography Location, geographical size,
& distance from producer
Market Size Number of customers in a
market
Market Density Number of buying units

115. (consumers or industrial
firms) per unit of land area
Market Behavior Who buys, & how, when, and
where customers buy
Product Variables
Bulk & Weight
Perishability
Unit Value
Degree of Standardization
Technical versus Nontechnical
Newness

116. Company Variables
Size The range of options is
relative to a firm’s size
Financial The greater the capital, the
Capacity lower the dependence on
intermediaries
Managerial Intermediaries are necessary
Expertise when managerial experience is lacking
Objectives Marketing & objectives may
& Strategies limit use of intermediaries
Intermediary Variables

117. Availability Availability of intermediaries
influences channel structure.
Cost Cost is always a consideration
in channel structure.
Services Services that intermediaries
offer are closely related to the
selection of channel members.
Environmental Variables
The impact of environmental forces is
a common reason for making
channel design decisions.
Competitive Forces

118. Economic Forces
Sociocultural Forces
Technological Forces
Legal Forces
Behavioral Variables
Develop congruent roles for
channel members.
Be aware of available power
bases
Attend to the influence of behavioral problems
that can distort communications.

119. Heuristics in Channel Design
9
Benefit
Fairly simple
prescriptions for
channel structure
Limitation
Mostly useful as
rough guide to
decision making

120. Themarketingchannelchallengeinvolves…
1. Understandinggapsinyourchannel
design.
2. Adjustorre-design
3. Monitorperformanceofchannel
members
FIVESTEPCHANNELANALYSIS
Step1-Segmentation
• Defineandprofileserviceoutputdemands
(SOD)bysegment.
– Valueaddedservicesperformedbyyourchannel
members
• Identifyenvironmentalcharacteristicsand

121. constraints
– Limitedinfrastructure,governmentconstraints,
economic,technological
Step2-Positioning
• Positionyourselfinthechannel(knowyour
strengths/weaknesses)
• Whichsegmentsareagoodtarget(channel
resourcesarelimited)
– Segmentsmustbeprofitable,accessible,
actionableandmeasurable
Step3-Targeting
• Knowingwhatsegmentstoignoreinone’schannel
designandwheretoapplymanagementseffort.
• Focusonkeysegmentsthatreaptheprofitablesales.
• Beawareof

122. – Managerialbounds
– Environmentalbounds
– Competitivebenchmarks
Step4–Establishneworrefineexisting
channels
• Gapanalysis
– Demandside
– Supplyside
GapAnalysis
• Whatgapsintheserviceoutputsoftheideal,
existing,andmanagementboundeddistribution
systemsshouldthefirmtrytoeliminate?
• Figure1,2&3identifiesthreesituationsthat
requirecorrectiveaction.
Source:(Stern,SturdivantandGetz,AccomplishingMarketingChan
nelChange:Paths

123. andPitfalls,1987)
Figure1GapAnalysisinDistributionSystemDesign
Management
Bounded
Distribution
System
Ideal
Distribution
System
Existing
Distribution
System
Situation A: Strategic Fit
Interpretation: Any distribution related problems result from
poor execution,
not poor design of the system.

124. Necessary Actions: Sharpen performance; maintain existing
system.
Figure2GapAnalysisinDistributionSystemDesign
Management
Bounded
System
Existing
Distribution
System
Ideal
Distribution
System
Interpretation: Management has designed a system which
reflects its needs,
but has given inadequate attention to customer needs.
Necessary Actions: Investigate validity of management
constraints and

125. objectives, and analyse customer requirements and expectations.
Situation B: Partial Fit
Gap
Figure3GapAnalysisinDistributionSystemDesign
Existing
Distribution
System
Management
Bounded
Distribution
System
Interpretation: End-user satisfaction can be improved by
improving service
outputs.
Preferred Actions: Examine certain management criteria to
assess the

126. possibility of bringing the existing systems even closer to the
ideal distribution
system.
Situation C: Complete Misfit
Ideal
Distribution
System
Gap Gap
Step5–ChannelImplementation
• Communicatechangesandimprovements
• Identifyingpowersources
• Identifyingchannelconflictsandresolve
• Coordinate,Controlandmanagerelationships
withchannelpartners.
PHASE6:

127. CHOOSINGTHE“BEST”CHANNEL
STRUCTURE
82
Choosing an Optimal
Channel Structure
Why is choosing an optimal channel structure
not possible?
1. Management is incapable of knowing all
possible alternatives.
2. Precise methods for calculating the exact
payoffs associated with each
alternative structures do not exist.
Techniques exist for developing

128. more exact methods.
10
BUT
Approaches for Choosing
Channel Structure
• “Characteristics of Goods & Parallel
Systems” Approach
• Financial Approach
• Transaction Flow Cost Analysis
Approach
• Management Science Approaches
• Judgmental-Heuristic Approach

129. PHASE7:
CHANNELMEMBERSELECTION
85
Channel Member Selection
Channel member selection may
be to replace channel
members that have left…
OR
…to obtain greater coverage.
1
Channel member selection – the 7th
and final phase of channel design

130. Selection may of may not be the
result of channel design
Selection & Distribution Intensity
The greater the intensity of
distribution…
…the less the emphasis on
selection
2
Summary
• Channeldesignreferstothosedecisions
associatedwithmarketingchannelsandthe
modificationsofexistingchannels.
• Channeldesignparadigmcanbeseenasaseven
phaseprocess.

131. • Understandingchannelflowandtheefficiency
templatehelpunderstandallocationofchannel
flowsandcostofchannelmembersperforming
thoseflows.
• Gapanalysisisausefulinmodifyingand
improvingchannelefficiencyandperformance.
CHAPTER
DesigningMarketingChannels
Lecture6
Part2DevelopingtheMarketingChannel
LearningObjectives
1. Channeldesign
2. Whoengagesinchannel
3. Channeldesignparadigm

132. 4. Whentomakeachanneldesigndecision
5. Distributionobjectives
6. Distributiontasks
7. Channelstructuredecisions
8. Variablesaffectingchanneldesigndecisionsandgap
analysis
9. Heuristicsinchanneldesign
10. Choosingtheoptimalstructure
2
Channel Design
Channel Design: Decisions
involving the development of new
marketing channels either where
none had previously existed or to
the modification of

133. existing channels
1
Channel Design
1. A decision made by the marketer
2. The creation and modification of channels
based on identifying gaps.
3. The active allocation of distribution tasks in an
attempt to develop an efficient structure
4. The selection of channel members
5. A strategic tool for gaining a differential
advantage
Distinguishing points of the definition include:

134. Who Engages in Channel Design?
• Producers,
manufacturers, service
providers, franchisors
• Look down the
channel
toward the market
• Look up the
channel
to secure
suppliers
• Look both up

135. and
down
the channel
Firms Wholesalers
Retailers
2
Channel Design Paradigm
1. Recognize the need for
channel design decision
7. Select
channel members
5. Evaluate
relevant variables and Gaps
6. Choose the “best”

136. channel structure
2. Set & coordinate
distribution objectives
3. Specify
distribution Flow tasks
4. Develop alternative
channel structures
3
PHASE1:
RECOGNISETHENEEDFORACHANNEL
DESIGN
7
When to Make a Channel
Design Decision

137. • Developing a new product or product line
• Aiming an existing product at a new market
• Making a major change in some other component
of the marketing mix
• Establishing a new firm
• Adapting to changing intermediary policies that
may inhibit attainment of distribution objectives
4
When to Make a Channel
Design Decision
• Dealing with changes in availability of particular
kinds of intermediaries
• Opening up new geographic marketing areas

138. • Facing the occurrence of major environmental
changes
• Meeting the challenge of conflict or other
behavioral problems
• Reviewing and evaluating
PHASE2:
SETTINGANDCOORDINATING
DISTRIBUTIONOBJECTIVES
10
Distribution Objectives
Setting distribution objectives
requires knowledge of which,
if any, existing objectives

139. & strategies may impinge
on these distribution objectives.
5
Setting Explicit Objectives
Dell Computer………
Our growth strategy involves reaching more
customers worldwide through new distribution
channels such as consumer, retail, expanding
our relationships with value added resellers,
and augmenting select areas of our business
through targeted acquisitions
12
Pharma Vending

140. 13
The Need for Congruency
Firm’s
overall
objectives
&
strategies
General
marketing
objectives &
strategies

141. Pricing
marketing
objectives &
strategies
Product
marketing
objectives &
strategies
Promotion
marketing
objectives &
strategies

142. Distribution
marketing
objectives &
strategies
PHASE3:
SPECIFYINGDISTRIBUTIONFLOWTASKS
15
Distribution Flow Tasks
Outlining distribution flow tasks is specific
and situationally dependent on the firm.
For example: Distribution flow tasks for a

143. manufacturer of consumer products
differs from those for products sold
in industrial markets.
Distribution tasks are a function of the distribution
objectives and the types of firms involved.
=
6
ChannelFlows
• Specificchannelmembersmayspecialisein
performingoneormoreflowsbutmaynot
participateatallintheperformanceoftheother
flows.
• Furtheritmaybetemptingtoremoveachannel
memberfromthechannel.

144. • Example.HPhaveaRepthatcallsdirectlyonamajor
corporateaccountbutthatsamecorporateaccount
isalsobeingservicedbyaValueAddedReseller.
• Everyflownotonlycontributestotheproductionof
valuedserviceoutputsbutisassociatedwithacost.
Importance of Channel Flows
Distributionchannelmemberssuchas
producers,intermediaries,andconsumers
assumesomecoststoperformmarketing
flows.
Thebasicassumptionisthataproducercan
addoreliminatemembersofachannelin
ordertoreachthefinalconsumer,butthe
marketingflowscannotbeeliminated.
THEEIGHTGENERICCHANNEL
FLOWS

145. 19
20
MARKETING FLOWS IN CHANNELS
Physical Physical Physical
Possession Possession Possession
Ownership Ownership Ownership
Promotion Promotion Promotion
Negotiation Negotiation Negotiation Consumers
Producers Wholesalers Retailers Industrial
Financing Financing Financing and
Household
Risking Risking Risking

146. Ordering Ordering Ordering
Payment Payment Payment
CommercialChannelSubsystem
Thearrowsaboveshowflowsofactivityinthechannel(e.g.physicalpo
ssession
flowsfromproducerstowholesalerstoretailerstoconsumers).Eachfl
owcarriesa
cost.Someexamplesofcostsofvariousflowsaregivenbelow:
21

147. MARKETING FLOWS IN CHANNELS (CONTINUED)
MarketingFlow
CostRepresented
Physicalpossession
Storageanddeliverycosts
Ownership
Inventorycarryingcosts
Promotion
Personalselling,advertising,salespromotion,
publicity,publicrelationscosts

148. Negotiation
Timeandlegalcosts
Financing
Creditterms,termsandconditionsofsale
Risking
Priceguarantees,warranties,insurance,repair,and
after-saleservicecosts
Ordering
Order-processingcosts

149. Payment
Collections,baddebtcosts
22
FlowtobePerformed:
ExamplesofIntermediariesWhoCanPerformFlow:
PhysicalPossession
Contractwarehouse
Shippingcompany(e.g.FederalExpress,UPS,airfreight)
Distributor
Retailers(includingbricksandmortar,catalog,online)

150. Ownership
Contractwarehouse
Distributor
Retailers(includingbricksandmortar,catalog,online)
Promotion
Distributor
Independentsalesrepresentative
Broker
Retailers(includingbricksandmortar,catalog,online)
Franchisees
Negotiation
Distributor
ExportMarketingCompany
Independentsalesrepresentative
Financing

151. Distributor
Broker
Retailers(includingbricksandmortar,catalog,online)
Creditcardcompany
Banks
Franchisees
Risking
Distributor
Retailers(includingbricksandmortar,catalog,online)
Creditcardcompany
Franchisees
Ordering
Distributor
Independentsalesrepresentative
Retailers(includingbricksandmortar,catalog,online)
Franchisees
Payment

152. Distributor
Shippingcompany(e.g.Schneider)
Retailers(includingbricksandmortar,catalog,online)
Franchisees
MAPPING FROM FLOWS TO BE PERFORMED
TO APPROPRIATE INTERMEDIARY CHOICES
Physical Possession - Ownership
• Ownertakestitleofgoods
• Bearsthecostofcarrytheinventory
• Capitalistiedupinproduct
• Physicalpossessionandownershipcommonly
movetogether
• Exceptionconsignmentselling

153. Promotion
• Promotionalactivitiesoperateat
– AboveandBelowthelineadvertisingactivity
– End-userpullthrough
• Sellingbyanemployee
• Outsidesalesforce(brokersandregistered
investmentadvisors)
• Third-partyreverselogistics-refurbished
products
Negotiation
• Occurswhenevertermsoftradeofsaleorof
themaintenanceofanongoingrelationship
arediscussedanddecided.

154. • measuredincostofpersonneltimespentin
negotiating
Channel Video – Chinese / Indian
Negotiation
Clicktoplayvideo
http://www.youtube.com/watch?v=f07FDFJf1k4
29
Financing
• Costsareinherentinthetermsofsalefrom
onelevelofthechanneltoanotheror

155. • Thechanneltotheend-user
• Paymentterms,discountforearlypayment
Channel Video
Gettingpaid
Clicktoplayvideo
https://www.youtube.com/watch?v=d1Uvg35icgg
32
Risking
• Manysourcesofrisking
– Long-termcontractslockindistributortoend-

156. user
– Nopriceprotectionforpartners
– Vendorstrytomitigatetheirriskondistributors
• Passonaftersalesservice
• Limitwarranties
• Channelstuffing
Channel Video
Importanceofpriceprotection
Clicktoplayvideo
https://www.youtube.com/watch?v=72N1CPfwCco
35

157. Channel Video
Channelstuffing
Clicktoplayvideo
https://www.youtube.com/watch?v=9bNRRa-tb_A
37
OrderingandPaymentFlows
• Doesthedistributororderfromvendor
direct?
• Orordersdirectfromvendorsfactory
overseas
– Quickshiplogistics
– Automatedreorderingsystems

158. Channel Video
Quickshiplogistics
Clicktoplayvideo
https://www.youtube.com/watch?v=xpqr-m5_hTQ
40
CHAPTER
Whyisitimportantnotto
performnecessarilyhigh
levelsofchannelflows?

159. CustomisingtheListofFlows
• Itisimportanttoknowwhento
– Customisechannelflows
– Combinechannelflows
– Expandaflow
• Promotionalflowmayconsistof
– Costofrunningasalesforce
– Costofrunningadvertisements
– Costofrunningpublicrelations
Whodoeswhatchannelflows?
• Crucialoncechannelflowsaredescribedmust
measureallcostsincurred
• Mustrewardcostlychannelflowperformance
bychannelmembers
• Whatchannelflowschannelmembersare

160. involveinarenotobvious
Describingthecurrentchannelwith
theEfficiencyTemplate
• Itmeasuresthecostsborneandvalueadded
bychannelmembersinachievingchannel
performance
• Apracticalapplicationoftheefficiencymodel
isdescribedonthenextslide
TheChannelEfficiencyModel
• Torevealhowtheflowscostsareshared
amongchannelmembers.
• Toexplainhowmemberscontributetothe
addedvalueofthewholechain.

161. • Toascertaintheflows’importancetothe
channel.
• Asapowerfultooltoexplaintheactual
channelperformanceandjustifychangesthat
companiesshouldmake.
UseofEfficiencyTemplatedescribes
1. Thetypesandamountsofworkdonebyeach
channelmemberintheperformanceof
channelflows
2. Theimportanceofeachchannelflowtothe
provisionofthedemandedconsumerservice
outputs.
3. Theresultingshareofchannelprofitsthat
eachchannelmembershouldreap
47

162. ChannelManagermust
Goal
• Minimisecostofrunningthe
distributionchanneltopreserve
profitmargins
Challenge
• Ensureenoughisspenton
performingthechannelflowsto
guaranteethegenerationof
desiredserviceoutputs
• Poordecisionsonhowtospend
moneyrunningthechannelwill
resultinlowprovisionofservice
outputs

163. • Competitorstakeadvantagein
holesinserviceoutputprovisions
• Spendingtomuchwillcreate
higherserviceoutputcoststhat
arerequired.
PHASE4:
DEVELOPINGALTERNATIVECHANNEL
STRUCTURES
50
Channel Structure Dimensions
Allocation Alternatives
7
3. Types of

164. intermediaries at each
level
1. Number of levels in
the channel
2. Intensity at the
various levels
Number of Levels
• Range from two to five or more
• Number of alternatives is limited to
two or three choices
• Limitations result from the following
factors:
ü Particular industry practices

165. ü Nature & size of the market
ü Availability of intermediaries
Intensity at the Various Levels
Intensive Selective Exclusive
Many Few One
Intensity Dimension
Numbers of Intermediaries (retail level)
Relationship between the intensity of
distribution dimension & number of retail
intermediaries used in a given market area.
Intensivedistribution

166. • Meansthatabrandcanbepurchasedthrough
manyofthepossibleoutletsinatradingarea
(atsaturationeverypossibleoutlet).
• Moreintensivelessthemanufacturercan
influencechannelmembersperformingflows
• Coversmanytransactionalproducts
Intensive Distribution
The Australian Financial Review: Case Studies with Business
News. (2007). McDonald’s :Addressing changing food values
(4 ed.) [Case Study]. Sydney, New South Wales :
SelectiveDistribution
• Meansmarketcoverageinwhichaproductis
distributedthroughalimitednumberof
wholesalersorretailersinagivenarea

167. • Usedinretailfacilities,whereresourcesor
imagemayhaveanimpactonconsumer
impression
• i.e.LVMH,RoyalCanin
LVMHATAGLANCE
Worldleaderinluxury
brands.
Total2008revenue:17.2
billioneuro's.
77,000employeesworldwide.
Arecentgroup(createdin
1987)thatisconstantly
expanding.
Aninternationalretail
networkofmorethan2,300
stores.

168. RoyalCanin
• Beganin1996-HenriLargarde
• 18%MarketshareinEurope
• Distribution–soldtobreeders
• Switchedtohypermarketsand
wasnotsuccessfulbrandnot
wellpresented
• Early1990sswitchedtoselling
throughspecialityoutlets:garden
stores,petdepartmentsaswellas
petstores
• Resulthighmargins,fastgrowth
andmarketshare
ExclusiveDistribution
• Meansabrandcanbepurchasedthroughone
channelpartnerinatradingarea

169. • Usefulinearlystagesofdistribution
evolvement
• Mayhavelimitedcoverage
• Allowsforfocus
• Powercanshifttoexclusivepartner
• i.e.ExamplesofsuchproductsincludeRolexwatches,Gucci
bags,Regalshoes,Celineneckties,andMarkCrosswallets
FerrariDealer
Network
Therearefiveauthorised
Ferrarishowroomsandafter-
salesfacilitiesinAustralia
Manyoftheauthorised
networkofFerrariDealers
haveenjoyedalengthy
partnershipwiththeFerrari
marquee

170. Types of Intermediaries
• Numerous types
• Manager’s emphasis on types of
distribution tasks performed by these
intermediaries
• Watch emerging types
– Electronic online auction firms (eBay)
– Industrial products sold in B2B markets
(Chemdex, Converge.com)
PHASE5:
EVALUATINGTHEVARIABLESTHATIMPACT
CHANNELSTRUCTUREANDCONDUCTGAP
ANALYSIS
62

171. Variables Affecting Channel Structure
8
1. Market Variables
2. Product Variables
3. Company Variables
4. Intermediary Variables
5. Environmental Variables
6. Behavioral Variable
Categories of Variables
Market Variables
Market Geography Location, geographical size,
& distance from producer
Market Size Number of customers in a
market

172. Market Density Number of buying units
(consumers or industrial
firms) per unit of land area
Market Behavior Who buys, & how, when, and
where customers buy
Product Variables
Bulk & Weight
Perishability
Unit Value
Degree of Standardization
Technical versus Nontechnical

173. Newness
Company Variables
Size The range of options is
relative to a firm’s size
Financial The greater the capital, the
Capacity lower the dependence on
intermediaries
Managerial Intermediaries are necessary
Expertise when managerial experience is lacking
Objectives Marketing & objectives may
& Strategies limit use of intermediaries

174. Intermediary Variables
Availability Availability of intermediaries
influences channel structure.
Cost Cost is always a consideration
in channel structure.
Services Services that intermediaries
offer are closely related to the
selection of channel members.
Environmental Variables
The impact of environmental forces is
a common reason for making
channel design decisions.

175. Competitive Forces
Economic Forces
Sociocultural Forces
Technological Forces
Legal Forces
Behavioral Variables
Develop congruent roles for
channel members.
Be aware of available power
bases

176. Attend to the influence of behavioral problems
that can distort communications.
Heuristics in Channel Design
9
Benefit
Fairly simple
prescriptions for
channel structure
Limitation
Mostly useful as
rough guide to

177. decision making
Themarketingchannelchallengeinvolves…
1. Understandinggapsinyourchannel
design.
2. Adjustorre-design
3. Monitorperformanceofchannel
members
FIVESTEPCHANNELANALYSIS
Step1-Segmentation
• Defineandprofileserviceoutputdemands
(SOD)bysegment.
– Valueaddedservicesperformedbyyourchannel

178. members
• Identifyenvironmentalcharacteristicsand
constraints
– Limitedinfrastructure,governmentconstraints,
economic,technological
Step2-Positioning
• Positionyourselfinthechannel(knowyour
strengths/weaknesses)
• Whichsegmentsareagoodtarget(channel
resourcesarelimited)
– Segmentsmustbeprofitable,accessible,
actionableandmeasurable
Step3-Targeting
• Knowingwhatsegmentstoignoreinone’schannel
designandwheretoapplymanagementseffort.

179. • Focusonkeysegmentsthatreaptheprofitablesales.
• Beawareof
– Managerialbounds
– Environmentalbounds
– Competitivebenchmarks
Step4–Establishneworrefineexisting
channels
• Gapanalysis
– Demandside
– Supplyside
GapAnalysis
• Whatgapsintheserviceoutputsoftheideal,
existing,andmanagementboundeddistribution
systemsshouldthefirmtrytoeliminate?
• Figure1,2&3identifiesthreesituationsthat

180. requirecorrectiveaction.
Source:(Stern,SturdivantandGetz,AccomplishingMarketingChan
nelChange:Paths
andPitfalls,1987)
Figure1GapAnalysisinDistributionSystemDesign
Management
Bounded
Distribution
System
Ideal
Distribution
System
Existing
Distribution
System
Situation A: Strategic Fit
Interpretation: Any distribution related problems result from

181. poor execution,
not poor design of the system.
Necessary Actions: Sharpen performance; maintain existing
system.
Figure2GapAnalysisinDistributionSystemDesign
Management
Bounded
System
Existing
Distribution
System
Ideal
Distribution
System
Interpretation: Management has designed a system which
reflects its needs,
but has given inadequate attention to customer needs.

182. Necessary Actions: Investigate validity of management
constraints and
objectives, and analyse customer requirements and expectations.
Situation B: Partial Fit
Gap
Figure3GapAnalysisinDistributionSystemDesign
Existing
Distribution
System
Management
Bounded
Distribution
System
Interpretation: End-user satisfaction can be improved by
improving service
outputs.

183. Preferred Actions: Examine certain management criteria to
assess the
possibility of bringing the existing systems even closer to the
ideal distribution
system.
Situation C: Complete Misfit
Ideal
Distribution
System
Gap Gap
Step5–ChannelImplementation
• Communicatechangesandimprovements
• Identifyingpowersources
• Identifyingchannelconflictsandresolve
• Coordinate,Controlandmanagerelationships
withchannelpartners.

184. PHASE6:
CHOOSINGTHE“BEST”CHANNEL
STRUCTURE
82
Choosing an Optimal
Channel Structure
Why is choosing an optimal channel structure
not possible?
1. Management is incapable of knowing all
possible alternatives.
2. Precise methods for calculating the exact
payoffs associated with each

185. alternative structures do not exist.
Techniques exist for developing
more exact methods.
10
BUT
Approaches for Choosing
Channel Structure
• “Characteristics of Goods & Parallel
Systems” Approach
• Financial Approach
• Transaction Flow Cost Analysis
Approach
• Management Science Approaches
• Judgmental-Heuristic Approach

186. PHASE7:
CHANNELMEMBERSELECTION
85
Channel Member Selection
Channel member selection may
be to replace channel
members that have left…
OR
…to obtain greater coverage.
1
Channel member selection – the 7th

187. and final phase of channel design
Selection may of may not be the
result of channel design
Selection & Distribution Intensity
The greater the intensity of
distribution…
…the less the emphasis on
selection
2
Summary
• Channeldesignreferstothosedecisions
associatedwithmarketingchannelsandthe
modificationsofexistingchannels.

188. • Channeldesignparadigmcanbeseenasaseven
phaseprocess.
• Understandingchannelflowandtheefficiency
templatehelpunderstandallocationofchannel
flowsandcostofchannelmembersperforming
thoseflows.
• Gapanalysisisausefulinmodifyingand
improvingchannelefficiencyandperformance.
CHAPTER
Selec-ngChannelMembers
Lecture7
Part2DevelopingtheMarke-ngChannel
Learning Objectives

189. 1. Channel member selection
2. Selection and distribution intensity
3. Finding members
4. Selection criteria
5. Adapting selection criteria
6. Who selects
7. Offering Inducements
8. Fair dealing and friendly relationships
2
Distributor Selection Process
3
Channel Member Selection
Channel member selection may
be to replace channel

190. members that have left…
OR
…to obtain greater coverage.
1
Channel member selection – the 7th
and final phase of channel design
Selection may of may not be the
result of channel design
Cisco
5
hDps://www.youtube.com/watch?v=X296ZokNXJE

191. Cisco Partner Summit
6
Selection & Distribution Intensity
The greater the intensity of
distribution…
…the less the emphasis on
selection
2
Importance of Selection
8

192. The Selection Process
3. Securing the
prospective
channel members
as actual
channel members
2. Applying
selection criteria
to determine the
suitability of
prospective
channel members
1. Finding prospective
channel members
Finding Members

193. 3
1. Field sales
organization
2. Trade
sources
3. Reseller
inquiries
4. Customers 5. Advertising
6. Trade
shows
7. Other
sources
Field Sales Organization
• They are often able to
pick up information

194. about likely
intermediaries.
• They may have lined up
prospective
intermediaries.
• The manufacturer must
adequately reward
salespeople for their
time & effort
establishing
connections.
Salespeople are the
best positioned to
know about potential
intermediaries
BUT:

195. Trade Sources
• Trade associations
• Trade publications
• Directories
• Trade shows
• Firms selling similar
products
• The “grapevine”
For Example:
• Industrial Distribution
magazine
• The Verified Directory of
Manufacturers’
Representatives
• The National Association of
Wholesaler-Distributors
• The National Retail

196. Federation
• The Encyclopedia of
Associations
Reseller Inquiries
Reseller
Inquiries
Many firms learn about direct
inquiries from intermediaries
interested in handling their product.
Firms receiving the highest number
of inquiries are the more
prestigious in their industry.
This is the main source of
information about potential new

197. channel
members for some manufacturers.
Customers
Customers are willing to give frank opinions
about the intermediaries who call on them.
Manufacturer conducts formal or informal surveys of
customers’ views of various distributors.
Manufacturer obtains information about
potential intermediaries.
=
Advertising
Trade magazine advertising
can generate a large number

198. of inquiries from prospective
Members.
It therefore can provide a large
pool from which to make selections.
Online
16
Trade Magazines
17
Other Sources

199. 1. Chambers of commerce, banks, & local real
estate dealers
2. Classified telephone directories or the yellow
pages
3. Direct-mail solicitations
4. Contacts from previous applications
5. Independent consultations
6. List brokers that sell lists of names of businesses
7. Business databases
8. The Internet
Trade Shows
Wholesale and retail trade associations
hold annual conventions.
Attending manufacturers have access to a
wide variety of potential channel members.
Small manufacturers meet face-to-face with

200. wholesalers & retailers.
Selection Criteria
• Credit & Financial
Condition
• Sales Strength
• Product Lines
• Reputation
• Market Coverage
• Sales Performance
• Management
Succession
• Management
Ability
• Attitude
• Size
4

201. SAS Channel Selection
21
McDonalds Franchise Selection
22hDps://www.youtube.com/watch?v=bdVCV6EULo0
Opening a McDonalds Franchise
23
CBA Commercial Finance Broker
Selection
24

202. Adapting Selection Criteria
Because no list of criteria is adequate
for a firm under all conditions…
…the channel manager should be
flexible when
using selection criteria.
5
Who Selects?
Who does the selecting?
• Producers & Manufacturers
• Wholesale Intermediaries

203. • Retail Intermediaries
6
Develop Partner Selection Screens
27
28
29
30

204. Securing Channel Members
. . . The supplier produces, the distributor
sells, and each is dependent upon the other.
Together they form a team, and teamwork
is essential if the association is to prove
mutually beneficial.
— Pegram
Offering Inducements
Advertising & promotional support
Management assistance
Fair dealing policies &

205. Friendly relationships
7
Product Line
1. Manufacturer offers good product line with
strong sales & profit potential
Product Line Inducements:
2. Stress value of good product line from
channel members’ perspective
Advertising & Promotion
Consumer Market:

206. Gain immediate credibility by using a strong
program of national advertising.
Advertising & Promotion
Inducements
Industrial Market:
Gain recognition by using a strong program of
trade paper advertising.
Management Assistance
Prospective members want to know whether the
manufacturer will help with the following:
• training programs
• financial analysis & planning
• market analysis
• inventory control procedures

207. • promotional methods
Management Assistance
Inducements:
Benefits of Partner Selection
36
Fair Dealing &
Friendly Relationship 8
Manufacturer’s Responsibility:
To convey to prospective channel members
that he or she is genuinely interested in
establishing a good relationship based on trust
and concern for their welfare as both business

208. entities and as people
Summary
• Selection of channel members is the last
(seventh) phase of channel design.
• The more selective the distribution more
emphasis in selection.
• The selection process involves
1. Finding prospective channel members
2. Applying selection criteria
3. Securing prospective members for the channel.
38
CHAPTERLogis.csandChannel
Management

209. Lecture10
Part2DevelopingtheMarke.ngChannel
LearningObjec-ves
1. Thedefini.onoflogis&cs
2. Themeaningofsupplychainmanagement
3. Theroleoflogis.cs
4. Thesystemsconceptoflogis.cs
5. Logis.cssystemcomponents
6. Keyinterfaceareasbetweenlogis.csandchannel
management
2

210. Logistics
Definition: Planning, implementing, and
controlling the physical flows of materials and
final goods from points of origin to points of
use to meet customers’ needs at a profit.
1
Supply Chain Management
2
Definition: Logistical systems that
emphasize close cooperat ion and
comprehensive inter-organizational
management to integrate the logistical

211. operations of the different firms in the
channel.
WhatisSupplyChainManagement?
The Role of Logistics
Its Essence
The movement of the right amount of
the right products to the right place

212. at the right time
3
Third-Party Logistics Providers
(3PLs)
Specialize in performing most or all of the
logistical tasks that manufacturers
or other channel members
would normally perform themselves
Provide service at lower cost than the
firms who hire third-party providers
Currently growing rapidly into
a major industry
3PLLogis.cs

213. Systems Concept
Warehousing
Order
Processing
Materials
Handling
Inventory
Control
Transportation

214. Packaging
4
Interrelated
components
of a
system
Total Cost Approach
Total Cost
Approach
Management attempts
to minimize the cost
of using the components
taken as a whole

215. Basic components of
A logistics system
Systems Concept
Management views logistics
as a system of
Interrelated
components
Logistics System Components
5
Transportation
Materials Handling
Order Processing
Inventory Control
Warehousing

216. Packaging
Transportation
• Most fundamental and necessary
component
• Accounts for the highest percentage of
the total cost of logistics
• Overriding issue facing the firm:
Choosing the optimum mode of
transportation to meet customer
service demands
13

217. DHLlowershippingcosts?
Materials Handling
Range of activities & equipment involved
in the placement & movement of products
in storage areas
Issues:
1. Minimizing the distances products are
moved within the warehouse during the
course of receiving, storage, & shipping
2. Choosing the kinds of mechanical
equipment that should be used
3. Making the best use of labor when

218. receiving, shipping, & handling products
16
Order Processing
Its importance in logistics lies in its
relationship with order cycle time—the
time between when an order is placed &
when it is received by the customer.
Issue:
Developing an efficient order processing
system
Inventory Control

219. The firm’s attempt to hold the lowest
level of inventory that will still enable it to
meet customer demand
Issue:
Keeping inventory at the lowest possible
level while concurrently placing orders for
goods in large quantities
Warehousing
The holding of products until they are
ready to be sold
Issues:
1. The location of warehouse facilities
2. The number of warehousing units

220. 3. The size of the units
4. The design of the units
5. The question of ownership
20
KivaWarehouseRobo.cs
Packaging
Packaging & its associated costs can
affect the other components of the system

221. Issue:
Using packaging to make a significant
difference in the effectiveness & efficiency
of the logistics system
23
TetraPakPackaging
The Output of a Logistics System

222. Customer service is the collection of activities
performed in filling orders and keeping
customers happy or creating in the customer’s
mind the perception of an organization that is
easy to do business with.
6
ZaraJustInTime
Logistics Service Standards

223. 1. Time from order receipt to order shipment
2. Order size & assortment constraints
3. Percentage of items out of stock
4. Percentage of orders filled accurately
5. Percentage of orders filled within a given
number of days from receipt of the order
6. Percentage of orders filled
7. Percentage of customer orders that arrive in good
condition
8. Order cycle time
9. Ease & flexibility of order placement
(9 Standards developed by Heskett, Galskowsky, & Ivie)
Key Elements of Customer Service
LaLonde Classification of Customer
Service:

224. 1. Product availability
2. Order cycle time
3. Distribution system flexibility
4. Distribution system information
5. Distribution system malfunction
6. Post-sale product support
Logistics Management
Logistics
Management
Concerned
specifically

225. with product flow
Channel
Management
The administration
of all the major
channel flows
7
Key Interface Areas between
Logistics & Channel Management
Interface 1
Defining of logistics service standards
Interface 2
Making sure the logistics program meets
channel members’ service standards

226. Interface 3
Selling the logistics program
Interface 4
Monitoring the results of the logistics
program
8
Defining Logistics Service Standards
The higher the service standards,
the higher the costs.
Key issue for Channel Manager:
Determining precisely the types and levels
of logistics service desired by channel

227. members
If included as a major component of the
manufacturer’s overall approach for supporting
channel member needs, the logistics program may be
the key feature of a strategic alliance.
Key issue for Channel Manager:
Ensuring that the program the experts prepare
is what the channel members want.
Evaluating the Logistics Program
1. Minimize out-of-stock occurrences.
2. Reduce channel member inventory requirements.

228. 3. Strengthen the manufacturer-channel member
relationship.
Key issue for Manufacturers:
Extending superior logistics capabilities to help
channel members improve their logistics
and marketing capabilities.
Selling the Logistics Program
Logistics systems must be continually
monitored, both in terms of how successfully
they are performing for the manufacturer
and how well they are meeting changing
channel member needs.

229. Key issue for Channel Manager:
Continually monitoring the channel members’
reactions to logistics programs.
Monitoring the Logistics System
1. Globalisa.on
2. Integratedlogis.cs
3. Greenlogis.cs
4. Informa.onTechnology
5. Security
Supply Chain Management Trends
Summary

230. • Logistics involves planning, implementing and
controlling the physical supply of goods from
point of origin to points of use to meet
customers needs at a profit.
• Basic role tight product in the right place
• Logistics systems change over time to meet
changing needs and problems.
• Careful monitoring required to spot
deficiencies
36
THE MARKETING CHANNEL
ENVIRONMENT
Lecture3

231. Part1Marke.ngChannelSystems
1
Company
Micro (Internal)
Environment
Suppliers Customers
Distributors Competitors
MACRO (External)
Environment
Political

232. Legal
Environment
Technological
Social
Economic
The marketing environment
POLITICAL
ECONOMIC
SOCIAL
TECHNOLOGICAL

233. LEGAL
ENVIRONMENTAL
PESTLEANALYSIS
Aframeworkthatassistsinanalyzingthe
externalenvironmentandiden?fyingthe
exis?ngopportuni?es&threats
MACRO (EXTERNAL) ENVIRONMENT
Factor ImpactofFactor Poten?al
OpportunityorThreat
Poli.cal/legal Increasedlegisla.onon
productliability
Mildthreat(-1)
Economic Recessioninkeyoverseas
markets

234. Majorthreat(-4)
Technological LiHleinnova.onlikely
fromcompe.tors
Neutralimpact(0)
Socio-cultural Increasedawarenessof
environmentalprotec.on
issues
Significantopportunity
(+5)
COMPETITVE ENVIRONMENT
Factor Impact of Factor Potential opportunity or
threat
Competition Intense rivalry in industry/
market place

235. Critical threat (-5)
Buyers Convergence of customer
requirements worldwide
Significant opportunity (+5)
Suppliers Few suppliers dominate the
industry
Critical threat (-5)
Threat of new entrants Industry barriers to entry low Threat (-3)
2
TREND TOWARDS PRIVATE LABEL

236. 11
VENEZUELA’S CRISIS EXPLAINED
13
DEFLATION IN JAPAN
15
CHANNEL SURFING QUESTION

237. Ifyouwereamanufacturer(exporter)ofgoodstoacountrywith
extremeinfla.onwhatchangeswouldyoumaketomanagingyour
distribu.onnetwork?
16
3
3
5

238. MOM AND POP – DISTRIBUTION ASIA
22
STARTUPS TARGET INDIAN MOM AND POP SHOPS
23
6
USING DRONES FOR DISTRIBUTION

239. 27
7
POLITICAL ENVIRONMENT
31
CHAPTERPromo,onthroughthe
Marke,ngChannel
Lecture9

240. Part3DevelopingtheMarke,ngChannel
LearningObjec,ves
① Channel member support
② Pull & Push Promotional Strategies
③ Promotion through channel members
④ Push promotion research findings
⑤ Basic Push promotional strategies
⑥ 4 types of “kinder & gentler” push promotion
strategies
2
Channel Member Support

241. Why is channel member support one of the major tools of the
manufacturer’s promotional mix?
Most products and services are not sold
directly
to final customers.
1
Pull Strategy
Pull Strategy versus Push !
Promotional Strategies
Push Strategy
Manufacturer builds strong
consumer demand for a
product to force members

242. to automatically promote
the manufacturer’s product
because it is in their obvious
self-interest to do so.
Manufacturer develops mutual
effort & cooperation in the
development & implementation
of
promotional strategies by
working directly with members
to develop strong & viable
promotional support.
2

243. Promotional Strategies
Pull Strategy
Manufacturer
Channel members
Final users
(consumer or industrial)
Final users
(consumer or industrial)
Channel members
Manufacturer
Push Strategy
1* 2 3
*Numbers indicate sequence!
of flows!
† Sequence of flows is!
simultaneous!

244. †
Promotion flow!
Negotiation flow!
Product flow !
Stand a higher probability of being
favorably received by the channel members
Strategies that are part
of an overall
program of manufacturer
support of channel
member needs
Strategies that involve
channel members

245. &
3
Promotion Through
Channel Members
Push Promotion Research Findings
All of the studies suggest that ad hoc,
quick-fix, and frequently offered
push promotions do not
foster high levels
of channel member support
on a consistent basis.
1.

246. 4
Push Promotion Research Findings
Push promotions should be viewed as part of strategic
channel management rather than as mere tactical
actions to elicit quick channel member responses to
sell more products.
2.

247. Push Promotion Research Findings
Given the wide range of factors that can affect channel
members’ responses to promotions, manufacturers
should study channel members’ needs carefully before
launching major push promotions.
3.
Push Promotion Research Findings
A tradition of post-promotion (follow-up) research to
evaluate channel member responses to push
promotions is needed if manufacturers expect to make

248. steady progress in improving the effectiveness of push
promotions.
4.
Push Promotion Research Findings
Despite the manufacturer’s best efforts, large and powerful
channel members will inevitably come into conflict
with the manufacturer over promotional issues
because their interests and goals will at times diverge.
5.

249. Business Market Management, 3rd edition
ChannelCore
Elements
Financial Returns
Quality Products
Competitive Prices
Reliable Delivery
Brand Equity
Technical Assistance
Market Research
Company Policies
Promotional Support
Responsiveness Systems
Training
Manufacturer
Sales Force Incentives

250. Distributor
Firm Incentives
Distributor
Sales Force
Incentives
Capability-Building
Program
Incen,ve
Programs
Channel Capability Program
Partner program investments
13
GSMS Channel Training Workshop
© 2009 Copyright, Channel Enablers International

251. © 2009 Copyright, Channel Enablers International
31
Whole channel program
• Partners act from their own reasons
not yours
• Partners do not sign contracts only
because of a product or a set of
marketing programs
• A complex set of relationship
“elements” must be visible
• If recruitment is lagging, an important
piece of the “whole program” may be
missing
© 2009 Copyright, Channel Enablers International
32

252. Partner program investments
Programs have different benefits for partners
Significant
None
Importance to Partner
Low High
Happy Noise
CompulsoriesCompulsoriesTotal Waste
DifferentiatorsDifferentiators
D
if
fe
re
n
ce

253. B
et
w
ee
n
V
en
d
o
rs
Happy Noise Differentiator
TOTAL WASTE Compulsory
Channel organisational alignment

254. 14
GSMS Channel Training Workshop
© 2009 Copyright, Channel Enablers International
© 2009 Copyright, Channel Enablers International
35
ChannelPRO™ framework
CE
Channel
Enablement
Business Plan
Technical, Sales
Marketing &
Operations
PS
Partner

255. Selection
Performance criteria
Gap analysis
Selection
Recruitment
PP
Partner
Programs
Partner Profitability
Compensation
Benchmarking
CA
Company
Alignment
Channel strategy & goals
Partnering processes
Financial analysis

256. Automation
WP
Whole
Product
Market need
Product Importance
Partner roles
Cost transfer
SP
Sales
Productivity
Management
Measurement
Plan & Review
MM
Market
Mapping

257. Market Life Cycle
Segmentation
Coverage
© 2009 Copyright, Channel Enablers International
36
Channel organisational alignment
• Management (all functions) must agree why
they want a channel. Channel decisions must
be collaborative
• Channel programs must be fully integrated
across organisational boundaries
• Partners place unexpected demands on
everyone
• Most vendors fail to anticipate and plan for
the impact of partner revenue growth on non-
channel parts of the company

258. • Change is always required to grow partner
revenue
HR
Professional
Services
Management
Direct Sales
Finance
and Admin
Customer
Services
Marketing
Basic Push Promotional
Strategies 5

259. 1. Cooperative Advertising
2. Promotional Allowances
3. Slotting Fees
4. Displays & Selling Aids
5. In-store Promotions
6. Contests & Incentives
7. Special Promotional Deals &
Merchandising Campaigns
Cooperative Advertising
Typical
Strategy: A sharing in the cost on a 50–50
basis up to some percentage of
the retailer’s purchases from
the manufacturer
Administration:

260. 1. Effective administration by
manufacturer is necessary to
avoid abuses & to help secure
cooperation from channel members
2. Channel manager must be sensitive
to channel members’ primary concern
about this strategy
UsingCoopAdver,sing
17
Promotional Allowances
Typical
Strategy:
Manufacturer offers channel member

261. a direct cash payment or a certain
percentage of the purchases on
particular products
Administration:
Manufacturer should conduct
research to determine whether it
is getting its money’s worth in
terms of retailer cooperation and
follow-through
Slotting Fees

262. Typical
Strategy:
Payments by manufacturers to
persuade channel members, especially
retailers, to stock, display, and
support new products
Administration:
Joint sponsorship of research
between retailers and manufacturers
on effects of slotting fees on various
topics could help alleviate conflict
WhatissloMngallowance?

263. 21
SupermarketPsychology
22
Slotting Fees
• Manufacturer pays retailer to get a product into a
store and/or gain prominent placement.
• Thousands of new grocery products per year
• Grocery stores often stock 30-45 thousand items
• There is room for only about 5% of 15,000 new
grocery products each year.
• Slotting fees help ensure grocer profits on a
product, help balance risk of trying unknown
product.

264. • Grocery is a narrow margin business, slotting fees
can represent a significant revenue source.
Displays and Selling Aids
Typical
Strategy:
Include point-of-purchase (POP)
displays, dealer identification signs,
promotional kits, special in-store
displays, & mailing pieces
Administration:
Channel manager should make the
effort to see whether the firm’s
selling aids and displays are serving

265. any useful purpose
Nikeinterac,vewindowdisplays
25
In-Store Promotions
Typical
Strategy:
Short-term events designed to create
added interest and excitement
for the manufacturer’s products
Administration:
The planning of a successful
in-store promotion should always

266. include considerations of the
potential benefits for the
retailers involved.
27
Contests and Incentives
Typical
Strategy:
Techniques that manufacturers use
to stimulate channel member sales
efforts for their products
Administration:

267. Manufacturer should put much
effort into determining the
view of channel members
toward this form of promotion
SeinfieldtheSalesContest
29
Special Promotional Deals &
Merchandising Campaigns
Typical
Strategy: Include a variety of push-type
promotional deals such as discounts
to channel members to encourage

268. them to order more products
Administration: Manufacturers need to develop
carefully planned strategies that are
based on knowledge of channel
member needs and that take a
long-term perspective on promotion
through the marketing channel
4 Types of “Kinder & Gentler”
Push Promotion
Training Programs
Quota Specification

269. Missionary Selling
Trade Shows
6
Training Programs
Wholesale: Help wholesalers’ knowledge, selling techniques,
and skill in counseling customers they call on
Retail: Help retailer’s product knowledge, selling techniques,
and counseling customers on product usage
Pro: Manufacturers can
assist wholesalers
& retailers by helping
to offset the cost.

270. Con: There is often little
time for training.
Quota Specification
Sales volumes that manufacturers specify for
channel members to generate during a
certain time period
Pros:
• Can amount to a substantial
sum and can make a major
difference in the dealers’
overall profit picture
• Can be effective in improving
channel member promotional
support

271. Cons:
• If presented in a coercive
fashion, it can produce ill will
and conflict rather than support
• Channel members may ignore
quota if manufacturer’s line
does not make up an important
part of the member’s product
mix
Missionary Selling
Manufacturer’s salespeople who are
specially assigned to supplement the selling
activities of channel members
Pro:
• A useful strategy when

272. channel members lack sales
capacity or competence to
handle tasks assigned to
them
• Useful when channel
members desire this service
Cons:
• Expensive
• Can cause conflicts in the
channel
• Some members view these
salespeople as intruding on
the time of their own sales
force
Trade Shows
Annual events organized by associations in
particular industries

273. Pros:
• Opportunity for manufacturer to sell existing & new channel
members substantial quantities of new products face-to-face
• A chance for manufacturers to socialize with channel
members
• Creates a sense of pride and belonging in channel members
that
sell its products
CrocsBoatTradeShowDubai
36
DigitalDisrup,on
• Digitaldisrup-onisthechangethatoccurs

274. whennewdigitaltechnologiesandbusiness
modelsaffectthevalueproposi,onofexis,ng
goodsandservices.
• Digitaldisrup,onimpactsallelementsofthe
marke,ngmix
• Digitaldisrup,oncanbeviewedasathreator
opportunity.
WhatisDigitalDisrup,on?
39
TechnologyandMarketFactors
10HyperDisrup,veBusinessModels

275. 1.TheSubscrip-onModel(Ne]lix,DollarShaveClub,
AppleMusic)
2.TheFreemiumModel(Spo,fy,LinkedIn,Dropbox)
3.TheFreeModel(Google,Facebook)
4.TheMarketplaceModel(eBay,iTunes,AppStore,
Uber,AirBnB)
5.TheAccess-over-OwnershipModel(Zipcar,
Peerbuy,AirBnB)
10HyperDisrup,veBusinessModels
6.TheHypermarketModel(Amazon,Apple)
7.TheExperienceModel(Tesla,Apple)
8.ThePyramidModel(Amazon,Microsoc,Dropbox)
9.TheOn-DemandModel(Uber,Operator,Taskrabbit)
10.TheEcosystemModel(Apple,Google)
Summary
• Promo,onalsupportanddevelopingcapability
buildingprogramsforchannelpartnersis

276. important.
• Promo,onalac,vitymustbecoordinatedand
plannedwithchannelpartners.
• Thereisavarietyofstandardpromo,onal
programs
• Movetomore“kinderandgentler”promo,ons
• DigitalDisrup,onnewdigitaltechnologiesand
businessmodelsanddistribu,onmodels
BehaviouralProcessesin
Marke2ngChannels
Lecture4
Part 1 Marketing Channel Systems

277. ©2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
1
4
Adaptive Networks
Complex Adaptive Systems

278. Vendor IT Firm
RetailersWholesalers
Corporate
Customer
Resellers
Alliance
Partners
Parent Firm
Gov’t &
Industry
Competitors
Cultural Impact
Channel Marketing Relationships (CMRs) Interpersonal
Commercial Relationships (ICRs)

279. Segment of
1st time
consumers
Segment of
Influencer
consumers Segment of
Long-term
consumers
Segment of
Short-term
consumers
Segment of
Lost
consumers
Segment of
Innovator
consumers
Individual
consumers Individual

280. consumers
Individual
consumers
Segment of
Potential
consumers
Figure 2.1:
Network approach and connections of
an information technology company
Interface
of (B-to-C)
Relationships
©2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible

281. website, in whole or in part.
2
Interaction of channel constructs in Channel Marketing
Relationships (CMRs)
Trust
Cooperation Commitment
(+) or (-)
Outcomes
(absence of
Conflict)
Long-term
relationship
Shared values
Personality
Factors

282. Balanced Power
Communication
Inter-Dependence
Adaptability
Importance
Conflict
Marke2ngChannels
©2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
3

283. ©2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
5
Alimitedamountofchannelconflictis
healthy…..However,oncethebalance
betweencoverageandconflictislost,
destruc2vechannelconflictcanquickly

284. undermineyourchannelstrategy,
marketposi2on,andproductline
profitability.
21
Resolving Conflict
“Communica+on,communica+on,communica+on.I
thinkthat’sthebiggest.Thethingisthatyouhaveto
havethatcommunica+ondiscussionwithmul+ple
pointswithinthevendorallofthe+mebecauseyou
can’trelyononepersontocarryitthrough.What
werealiseisthatwhenyouhaveonepointpersonon
avendor,likeyourvendoraccountmanager,when
majorconflictsarise,they’regoingtoprotecttheir
buC,notyours”.

285. ConflictResolu2on-TheWaterboy
26
Importance of effective Account
Management
“Igetanewvendoraccountmanagerwhoissomuch
beCerthanthelastaccountmanagerandthisis
greatandthey’reveryeffec+ve.Soyoucome
togetherandarecloseandthishasalas+ngimpact
un+lthataccountmanagerleaves.Anotherone
mightcreateasortofsepara+on.Youknowwhen
youraccountmanagerchangesandyougetan
ineffec+veone.It’sallaboutpeoplerela+onships.If

286. anaccountmanagerhasliedandyoulearnthatthey
liedtoyouandtheywillcauseyoutomoveapart.”
Power
Marke2ngChannels
©2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
©2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
7

287. WalmartRetailerPower
Roles
Marke2ngChannels
©2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.

288. Communica3on
Marke2ngChannels
©2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
10
©2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.

289. Trust
Marke2ngChannels
Summary
• Channelsareabehaviouralsystemunderpinnedby
rela2onshipbonds.
• Channelspartnersareco-dependentoneachother.
• Managingandresolvingconflictisakeychannel
managementskill
• Understandingtheapplica2onofpowerinchannel
rela2onships

290. • Communica2onconsistencyover2meresultsintrust
andprofits.
48