The document outlines the design and management of integrated marketing channels, emphasizing the importance of understanding customer needs and channel partners. It discusses various marketing strategies, including push and pull strategies, and highlights the benefits of multichannel and hybrid marketing systems. Additionally, it covers channel design decisions and conflict management within marketing channels.

1. DESIGNING & MANAGING
INTEGRATED MARKETING
CHANNELS
Presented By:
Dhruv Maniar (M1603)
R.Harish (M1605)
Satarupa Mohapatra (M1613)
Vivek Kumar (M1617)
Marketing Management - Group 2 1

2. ‘SUCCESSFUL VALUE
CREATION NEEDS
SUCCESSFUL VALUE
DELIVERY’
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3. • Marketing Channel/Trade
Channel/Distribution Channel
Importance of Marketing Channel:
• To convert potential buyers to profitable
customers.
• Firm’s pricing depends on selection of
marketing channels.
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4. Categories of Channel Partners
Merchants
Agents
Facilitators
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5. Understanding Customer’s Needs
• Factors based on which customers chooses a
particular channel are :-
1. Price.
2. Product assortment.
3. Convenience.
4. Own shopping goals like economic, social and
experimental.
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6. Categories of Buyer
1. Habitual shoppers
2. High value deal seekers
3. Variety loving shoppers
4. High involvement buyers
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7. Marketing
Strategy
Push Strategy Pull Strategy
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8. Push Strategy
Brand
Loyalty is
Low
Brand
Selection at
the spot
Product is an
impulse item
Product
Benefits are
well
understood
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9. Pull Strategy
Appropriate
when :
Brand
Loyalty is
High
High
Involvement
product
Brand
Distinction
is Possible
Brand
Selection
Prior to
Purchase
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10. MULTICHANNEL MARKETING
Benefits of adding multiple channels:
• Increased market coverage
• Lower channel cost
• Ability to do more customized selling
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11. Multichannel Marketing
Customer
/End User
Direct Sales
Force
Outbound
Telemarketing
Direct Mail
with an
inbound phone
number
Retailers
Internet
.
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12. Integrating Multichannel Marketing
Systems – Omni-channel Marketing
Traditional
Marketing
Channels
Internet/Tele
-marketing
Consumers/End
Users
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13. Hybrid Marketing System
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14. • To mange hybrid channels, company must
make sure that these channels:-
1. Work well together.
2. Match each target customer’s preferred way of
doing business.
• Features expected by customers in a hybrid
channel:-
1. Ability to order online and pick it up from a
convenient retail store.
2. ability to return the ordered product back to a
nearby retail store.
3. Right to discounts and promotional offers.
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15. Value Networks
• A value network includes:-
1. Firm’s suppliers.
2. Its supplier’s supplier.
3. Its intermediate customers.
4. End customers
5. Demand Chain Planning
• Managing a value network:
SCM – ERP Systems: Cash Flow, Manufacturing, Human Resources,
purchasing and other
CRM
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16. Marketing Channel Flow
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17. Channel Function and Flows
1. Gathers information
2. Negotiate and reach agreement on price.
3. Place orders with manufacturers.
4. Acquire the funds to finance inventories.
5. Provide storage and movement of goods.
6. Payment of the bills by buyers.
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18. Types of Flow
• Forward Flow.
• Backward Flow.
• Bi-Directional Flow.
• A manufacturer selling a physical product or
service might require only three channels:
1. Sales channel.
2. Distribution channel.
3. Service channel.
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19. Marketing Channels
Consumer Marketing
Channels
Industrial Marketing
Channels
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20. Channel Levels
• The producers and final customers are part of
every channel.
• A zero level channel (Tupperware, TVC
Product).
• The one level channel.
• Two level channel.
• Three level channel.
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21. Channel-Design Decisions
Designing a marketing channel requires:-
1. Analyzing customer needs.
2. Establishing channel objectives.
3. Identifying major channel alternatives.
4. Evaluating major channel alternatives.
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22. 1. Analyzing Customer Needs
Channels produce five service outputs:-
1. Lot Size.
2. Waiting and Delivery Time.
3. Spatial Convenience:- Exide batteries has
made it easier for consumers to access them.
4. Product Variety.
5. Service Backup.
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23. 2. Establishing Objectives and Constraints
• Channel objectives vary with product
characteristics :-
1. Perishable products - direct marketing.
2. Bulky products - channels that minimize
shipping distance and amount of handling.
3. Custom built machinery - company sales
representatives.
4. Products requiring installations and regular
check ups – company owned or leased
franchisees.
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24. 3. Identifying Major Channel Alternatives
A firm can choose from a wide variety channels
for reaching customers:-
1. Sales force.
2. Internet.
3. Distributors.
4. Manufacturer Representatives.
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25. Number of Intermediaries
A firm can decide on number of intermediaries
to use at each level by using these three
strategies :-
1. Exclusive distribution.
2. Selective distribution.
3. Intensive distribution.
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26. 4. Evaluating Major Channel Alternatives
• Each channel alternative needs to be
evaluated against economic, control &
adaptive criteria.
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27. The Value-Adds versus Costs of
Different Channels
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28. Terms and Responsibilities of Channel
Members
 Each channel member must be treated
respectfully and must be given opportunity to
be profitable.
 Main policies are:-
1. Price policies.
2. Condition of sales.
3. Territorial rights.
4. Mutual services and responsibilities.
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29. 1. Selecting Channel Members
 To select a channel member producer should
determine:-
1. No. of years in business.
2. Other lines carried out.
3. Growth and profit record.
4. Financial strength.
5. Cooperativeness.
6. Service reputation.
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30. 2. Training and Motivating Channel
Members
 After a channel has been chosen, company
must Select, Train & Motivate individual
intermediaries for each channel.
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31. Powers a manufacturer posses to
elicit cooperation from intermediaries
1. Coercive power:- threatening intermediaries to
terminate relationship if they fail to cooperate.
2. Reward power:- offering extra benefits on
performing specific act or function.
3. Legitimate power:- demand for behavior that is
warranted under contract.
4. Expert power:- having a special knowledge that
intermediaries value and doesn’t posses.
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32.  Channel Partnership:- Efficient Consumer
Response (ECR) opted by manufacturer and
intermediaries to streamline supply chain and
cut costs.ECR organizes relationship between
manufacturer and intermediaries in two
areas:-
1. Demand side management:- collaborative
activities to stimulate demand from
consumer side by promoting joint marketing
and sales activities.
2. Supply side management:- collaborative
practices to optimize supply.Marketing Management - Group 2 32

33. 3. Evaluating Channel Members
 Manufacturers regularly check performance
against standards such as:-
sales quotas
inventory levels
customer delivery time
treatment of damaged and lost goods
cooperation in promotional and training
programs.
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34. 4. Modifying Channel Design
 A channel is modified when:-
1. Channel is not working well as planned.
2. Consumer buying pattern change.
3. Market expands.
4. New competition arises.
5. Product moves into latter stage of its product
life cycle.
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35. Channel Integration System
Marketing
Systems
Horizontal
Marketing
Systems
Vertical
Marketing
SystemsMarketing Management - Group 2 35

36. Horizontal Marketing System
• A horizontal marketing system is one in which
two or more unrelated companies put
together resources or programs to exploit an
emerging market opportunity.
• Each one lacks capital, know how production,
marketing resources to venture alone.
• Companies might work with each other on
temporary or permanent basis.
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37. Vertical Marketing System
• The producer, wholesaler and retailer
acts a unified system.
• One channel member, the channel
captain owns or franchises the others
or has so much power that they all
cooperate.
• VMS arose as a result of strong channel
members’ attempt to control behavior
and eliminate the conflict.
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38. Vertical Marketing
System
Corporate Vertical
Marketing System
Administered
Vertical Marketing
System
Contractual
Vertical Marketing
System
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39. • Corporate Vertical Marketing System:- It
combines successive stages of production
and distribution under single ownership.
• Administered Vertical Marketing System:- It
coordinates successive stages of production
and distribution through size and power of
one of the members.
• Contractual Vertical Marketing System:- It
consists of independent firms at different
levels of production and distribution, in order
to obtain more economies or sales impact
what they had achieved alone.
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40. Contractual
Vertical Marketing
Systems
Wholesalers
Sponsored
Voluntary Chain
Retailer
Cooperatives
Franchisee
Organizations
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41. • Wholesalers Sponsored Voluntary Chain:- Wholesalers
organize voluntary chains of retailers to help them
standardize their selling practices and help them achieve
buying economies in order to compete with large chain
organizations.
Eg: Coca-Cola bottler is a manufacturer-sponsored
wholesaler.
• Retailer Cooperatives:- Retailers take the initiative and
organize new business entity to carry on wholesaling with
some production. Members concentrate their purchases
through retailer co-op and plan their advertising jointly.
Profits pass back to members in proportion to their
purchase.
Eg: Mother Dairy, AMUL etc.
• Franchisee Organization:- A channel member called
franchisor might link several successive stage in the
production-distribution process.
Eg: McDonalds
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42. Conflict, Cooperation and Competition
• Channel conflict is generated when one
channel members’ action prevent another
channel from achieving its goals.
• Channel coordination occurs when channel
members are brought together to advance
goals of the channel as opposed to their own
potentially incompatible goals.
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43. Conflict
Types of Conflict
Causes of Conflict
Managing
Conflicts
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44. Types of Conflicts
1. Horizontal Conflict- It occurs among firms at the
same level of channel. Eg- One dealer may
complain about other.
2. Vertical Conflict- It occurs among different levels
of the same channel. Eg- The wholesaler may
complain about Distributer/Retailer.
3. Multichannel- Occurs when the manufacturer
establishes two or more channels that sell to
same market. Eg- Goodyear selling tires through
independent Dealers & Wallmart.
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45. Causes of Channel Conflict
1. Goal incompatibility :- Manufacturers want
to achieve rapid market penetration through
low price policy.
2. Unclear Roles and Rights :- HP may sell
personal computers to large accounts
through its own sales force, but its licensed
dealers may also be trying to sell to large
accounts.
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46. 3. Differences in Perception:- Disputes between
manufacturers and distributors about optimal
advertising strategy.
4. Intermediaries Dependence on Manufacturer:-
Fortune of exclusive dealers depend totally
upon manufacturers’ products and pricing
decisions which creates high potential for
conflict.
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47. Managing Channel Conflict
1. Strategic Justification
2. Dual Compensation
3. Adoption of Superordinate Goal:- Channel
members come to an agreement on
fundamental goals they are jointly seeking,
weather it is survival, market share, high
quality or customer satisfaction.
4. Exchange of Employees
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48. 5. Joint Membership in Trade Association:- The
manufacturer and the intermediaries come
together in good cooperation which may lead to
better understanding between them.
6. Co-optation:- It is an effort by one organization
to win the support of leaders of other
organization by including them in advisory
council, board of directors, which reduces the
chances of conflicts.
7. Diplomacy, Mediation or Arbitration:- when
conflict is chronic, the companies may need to
resort to diplomacy, mediation or arbitration.
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49. • Diplomacy:- It takes place when each
sends a person or groups to meet with its
counterparts to resolve the conflict.
• Mediation:- It means resorting to a neutral
third party skilled in conciliating the two
parties interest.
• Arbitration:- It occurs when both the parties
agree to present their arguments to one or
more arbitrators and accept their decisions.
8. Legal Recourse:- when none of the above
methods prove effective, company or
channel partners may choose to file a law
suit. Marketing Management - Group 2 49

50. Thank You!!
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