ELECTRONIC CHANNELS OF DISTRIBUTION -ROSENBERG

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Part 4: Additional Perspectives on Marketing
Channels
CHAPTER 15
Electronic
Marketing
Channels
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©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.
Learning
Objectives ① Electronic marketing channels
② Structure of electronic channels
③ Disintermediation and reintermediation
④ Internet limits
⑤ Developments and trends
⑥ Advantages and disadvantages
⑦ Implications
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©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.
Objective
1 Electronic Marketing Channels (1 of 2)
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Electronic Marketing Channels (2 of 2)
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Objective
2
Structure of Electronic Marketing
Channels
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©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.
Objective
3
Disintermediation and
Reintermediation (1 of 2)
Disintermediation
Intermediaries become
superfluous because
producers gain exposure
to vast numbers of
customers in cyberspace
Examples: None
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©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.
Objective
3
Disintermediation and
Reintermediation (2 of 2)
Reintermediation
Shifting, changing, or
adding middlemen to the
channel
Examples: Amazon.com
Autobytel Inc.
Peapod
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©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.
Disintermediation versus
Reintermediation
The Internet has not eliminated middlemen, or
caused total disintermediation.
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Objective
4 Internet Limits
Product Flow
• Cannot be digitized
• Processed slowly, often by people
• Is basis for all other flows—
negotiation, ownership, information,
& promotion
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Objective
5 Developments & Trends
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Profile of Online Shoppers
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Future of Online Shopping
Online Sales as a Percentage of Total Retail Sales
Year Online as % of
Retail Sales
% Change from
Previous Year
2002 1.3 19.7
2010 8.0 0.0
2011 9.0 12.5
2012 10.0 11.1
2013 10.0 0.0
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©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.
Electronic Channels on Social Network
Sites
• By 2009, almost ½ of Americans had a Facebook or
MySpace account
• Among American, age 18-33, almost ¾ were
registered with Facebook or MySpace
• Businesses are now rapidly engaging in F-commerce
(Facebook Commerce)
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©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.
Objective
6 Advantages & Disadvantages (1 of 2)
Advantages of
Electronic
Marketing Channels
1. Global scope & reach
2. Convenience/rapid transaction processing
3. Information processing efficiency & flexibility
4. Data-based management & relationship capabilities
5. Lower sales & distribution costs
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Advantages & Disadvantages (2 of 2)
Disadvantages of
Electronic
Marketing Channels
1. Lack of contact with actual products & delayed possession
2. Fulfillment logistics not at Internet speed or efficiency
3. Clutter, confusion, & cumbersomeness of Internet
4. Non-purchase motives for shopping not addressed
5. Security concerns of customers
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Objective
7 Implications
• Objectives & strategies of the firm & electronic
marketing channels
• Role of electronic marketing channels in the
marketing mix
• Channel design & electronic marketing channels
• Channel member selection & electronic
marketing channels
• Channel management & electronic marketing
channels
• Evaluation & electronic marketing channels
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Objectives & Strategies of the Firm
Role of distribution more complex because
of electronic marketing channels
=
Channel manager must consider whether Internet-based
channels fundamentally affect the firm’s decision about
the priority given to distribution
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The Marketing Mix
The Internet arms large numbers of customers with
more information about products & services to level
the playing field
The fourth P, place (distribution), may assume a larger
role relative to the other three variables for more &
more firms
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Channel Design
The channel manager of retailers, industrial, and B2B
markets should provide “channel-surfing” consumers
with whatever channels or combinations of channels they
desire
=
A facet of the development of an effective multichannel
marketing strategy
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Channel Member Selection
Complexity grows as channel member selection may
include the need to avoid conflict with conventional
channel members
=
The need to select members carefully
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Channel Management
Multichannel challenge of conventional and electronic
channels
=
The fundamental issues of motivating channel members,
building cooperation, managing conflict, & coordinating
elements of the marketing mix requires manager’s full
attention
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Evaluation
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Discussion Question #1
The Internet electronically links many thousands of
manufacturers to millions of consumers, thereby
eliminating the need for middlemen in the twenty-first
century. Who needs intermediaries if customers can go
online and manufacturers all have Web site that can be
visited by customers from literally all corners of the
earth? Shopping trips, malls, stores, indeed, the bricks
and mortar of current channel structure will eventually
become obsolete—a relic of earlier centuries.
Do you agree or disagree with this scenario? Discuss.
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Discussion Question #3
Office Depot has almost 1,000 office superstores and a giant
catalog of office supplies that it offers via mail order. Yet Office
Depot also enables its customers to shop on the Internet. Its
Web site offers virtually all of the products Office Depot carries
in its stores and catalog and guarantees next-day delivery to
most locations in the United States with no delivery charge on
orders over $50. Online order tracking is available, and
customized ordering, which takes into account the historical
patterns of an individual customer’s product purchases, is also
a feature of Office Depot’s Internet-based channel.
What do you see as the advantages of Office Depot’s
multichannel strategy? Are there any disadvantages?
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Discussion Question #5
One of the potentially powerful advantages of m-commerce is the ability of
sellers to target offers to consumers when they are in close proximity to the
seller. This is made possible based on smartphone technology that tracks
the exact geographical locations of their users. For example, if a consumer
is near a Staples Office Superstore, a text message can be automatically
sent to the consumer’s smartphone about a special offer on, say, print
cartridges and paper. The technology that has made such m-commerce
based proximity marketing possible was developed by startups such as
ShopKick, Where, and Loopt, as well as by giants such as AT&T’s
ShopAlerts. Although available to anyone with a smartphone, the proximity
alerts will only be sent to consumers who have signed up for the program.
Do you think this type of m-commerce is an important channel option for
consumers and sellers? Why or why not?
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