1. MARKETING CHANNELS:
DELIVERING CUSTOMER VALUE

2. Chapter Questions
• What is a marketing channel system and value
network?
• What work do marketing channels perform?
• How should channels be designed?
• What decisions do companies face in managing their
channels?
• How should companies integrate channels and
manage channel conflict?
• What are the key issues with e-commerce?

3. Raymond
presents
world-
class
experience
through its
stores

4. What is a Marketing
Channel?
A marketing channel system is the particular set of
interdependent organizations involved in the process of
making a product or service available for use or
consumption.

5. Channels and Marketing
Decisions
• A push strategy involves the manufacturer using
its sales force and trade promotion money to
induce intermediaries to carry, promote, and sell
the product to end user.
• A pull strategy involves the manufacturer using
advertising and promotion to induce consumers to
ask intermediaries for the product, thus inducing
the intermediaries to order it.

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

7. Rural Distribution
Traditional Channels
for Reaching Out to
Rural Customers
• Haats
• Mandis
• Melas
Innovative Distribution
Channels for Rural
Markets
• Hub and Spoke
• Model
• Mobile shops and offices
• Linkage with community
based organizations
(SHGs, NGOs, and
cooperatives

8. Marketing Channel Flows

9. Categories of Buyers
Habitual shoppers
High value deal seekers
Variety-loving shoppers
High-involvement shoppers

10. Types of Shoppers
• Service/quality customers
• Price/value customers
• Affinity customers

11. Consumer Marketing Channels

12. Figure 15.3
Industrial Marketing Channels
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13. Designing a
Marketing Channel System
Analyze customer needs
Evaluate major channel alternatives
Identify major channel alternatives
Establish channel objectives

14. Channel Service Outputs
Lot size
Waiting/delivery time
Spatial convenience
Product variety
Service backup

15. Identifying Channel Alternatives
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Types of
intermediaries
Number of
intermediaries
Terms and
responsibilities

16. Number of Intermediaries
Exclusive
Selective
Intensive

17. Terms and Responsibilities
of Channel Members
• Price policy
• Condition of sale
• Distributors’ territorial rights
• Mutual services and responsibilities

18. Channel-Management Decisions
Selecting channel members
Training channel members
Motivating channel members
Evaluating channel members
Modifying channel members

19. Channel Power
• Coercive
• Reward
• Legitimate
• Expert
• Referent

20. Channel Integration and Systems
Vertical marketing
systems
• Corporate VMS
• Administered VMS
• Contractual VMS
Horizontal
marketing systems
Multichannel
systems

21. What is Channel Conflict?
• Channel conflict occurs when one member’s actions
prevent another channel from achieving its goal.
• Types of channel conflict
• Vertical
• Horizontal
• Multichannel

22. Causes of Channel
Conflict
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Goal incompatibility
Unclear roles and rights
Differences in perception
Intermediaries’ dependence
on the manufacturer

23. Strategies for Managing Channel
Conflict
• Adoption of
superordinate goals
• Exchange of
employees
• Joint membership in
trade associations
• Cooptation
• Diplomacy
• Mediation
• Arbitration
• Legal recourse