A marketing channel system involves a set of interdependent organizations that make a product available to consumers. Channel members perform functions like transportation, storage, financing, and risk assumption. Companies must design their channel structure and make decisions about channel members. They also have to manage conflicts between channels and integrate different channels like stores and online. The key issues with e-commerce include deciding between pure online selling versus a hybrid online and physical store approach.

1. Marketing Channel
Management

2. Learning Objectives
 What is a marketing channel system?
 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. 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

4. Channels and Marketing
Decisions
 A push strategy uses the manufacturer’s
sales force, trade promotion money, and
other means to induce intermediaries to
carry, promote, and sell the product to end
users
 A pull strategy uses advertising, promotion,
and other forms of communication to
persuade consumers to demand the product
from intermediaries

5. 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

6. Marketing Channel Flows

7. Consumer and Industrial Marketing
Channels

8. Designing a Marketing Channel
System
Analyze customer needs
Evaluate major channel alternatives
Identify major channel alternatives
Establish channel objectives

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

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

11. Number of Intermediaries
Exclusive
Selective
Intensive

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

13. The Value-Adds vs. Costs of Different
Channels

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

15. Channel Power
 Coercive
 Reward
 Legitimate
 Expert
 Referent

16. Channel Integration and Systems
Vertical marketing systems
 Corporate VMS
 Administered VMS
 Contractual VMS
Horizontal marketing
systems
Multichannel systems

17. 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

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

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

20. e-Commerce Marketing Practices
 Pure-click
 Brick-and-click

21. Marketing Debate
 Does it matter where you are sold?
Take a position:
1. Channel images do not really affect
the brand images of the products they
they sell that much.
or
2. Channel images must be consistent with
the brand image.