Strategy in MKT Channel

1. Chapter 5
Strategy in Marketing Channels

2. Marketing Channel Strategy
5
Objective 1:
The broad principles by which the firm expects to achieve its
distribution objectives for its target market(s)
This definition, though parallel to Kotler’s definition of
marketing strategy
Thus, marketing channel strategy is concerned with the place
aspect of marketing strategy
To achieve their distribution objectives, six basic distribution
decisions:
Channel Strategy:

3. 5
Distribution Decisions
Objective 2:
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

4. 5
Channel Strategy as Overall
Corporate Objective
Objective 3:
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 Consider,
For example,
BMW, the internationally prestigious maker of high-
performance luxury cars. BMW wants to revolutionize the way
its automobiles are distributed in the United States. Rather
than manufacturing automobiles ahead of time and placing
them in dealer inventories,

5. 5
The Value Chain
Firm infrastructure
Human resource management
Technology development
Human resource management
Inbound Operations Outbound Marketing Service
logistics logistics & sales
Support
Activities
Primary Activities

6. 5
Determining the Priority Given
to Distribution
Peter Drucker, had this to say about the importance of
distribution:
Changes in distributive channels may not matter much to GNP and
macroeconomics. But they should be a major concern to every
business and industry Everyone knows how fast technology is
changing. Everyone knows about markets becoming global and
about shifts in the work force and in demographics. But few people
pay attention to changing distribution channels Apple CEO Steve Jobs
made a strategic distribution decision include the establishment of its own
“bricks and mortar” retail stores.
If we fail to manage the distribution of our products and services properly,
our revenue, gross margin and profitability could suffer.

7. 5
Channel Strategy & the Marketing Mix
To fulfill the criteria of marketing mix we are not able to
neglect the role of distribution
The job of the marketing manager is to develop the right
combination of the four Ps to provide and maintain the desired level
of target market satisfactions (Ts). To do so, the marketing manger
has to consider the possible contributions of each variable in
meeting the demands of the target market.

8. Distribution Relevance to Target Market Demand
1. Distribution is the most relevant variable for satisfying target
market demands.
2. Parity exists among competitors in the other three variables of
the marketing mix.
3. A high degree of vulnerability exists because of competitors’
neglect of distribution.
4. Distribution can enhance the firm by creating synergy from
marketing channels.

9. 5
Objective 5:
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:
or
or
or
The firm should choose distribution
strategy for strategic emphasis

10. Target Market Demand
5
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.

11. 5
Competitive Parity
Distribution advantages are not easily
copied by competitors.
Distribution advantages are based on a
combination of superior strategy, organization,
and human capabilities.

12. 5
Distribution Neglect
Competitors’ neglect of distribution
strategies provides excellent opportunities.
The channel manager must analyze target
markets to determine whether competitors have
neglected distribution and whether vulnerabilities
exist that can be exploited.

13. Distribution and Synergy
5
“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.

14. 5
Differential Advantage
& Channel Design
Objective 6:
Differential advantage, also called sustainable
competitive advantage, occurs when a firm
attains a long-term, advantageous position
in the market relative to competitors.
• Caterpillar

15. 5
Positioning the Channel
A firm that plans the channel and makes
decisions by viewing the relationship
with channel members as a partnership
or strategic alliance that offers
recognizable benefits to the
manufacturer & channel members on a
long-term basis
• Infiniti

16. 5
Selection of Channel Members
Objective 7:
• 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
Because customers perceive channel
members as an extension of the manufacturer’s own
organization, members should:

17. Channel Strategy & Managing the
Channel
5
Objective 8:
3
Strategic
Questions
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 to
enhance channel
member cooperation?

18. Closeness of Channel Relationships
5
• Distribution intensity
• Targeted markets
• Products
• Company policies
• Middlemen
• Environment
• Behavioral dimensions
Factors to consider

19. Marketing Mix in
Channel Management
5
Marketing
Mix
Product
strategy
Pricing
strategy
Promotion
strategy
Distribution
strategy

20. Motivation of Channel Members
5
Objective 9:
Portfolio concept:
A tool for motivating different types
and sizes of channel members participating
in various channel structures who may respond
differently to various motivation strategies.

21. 5
Evaluation of Channel Member
Performance
Objective 10:
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
developing & managing channel