Session 25 MG 220 BBA - 10 Nov 10


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Session 25
MG 220 Marketing Management
BBA 09 Sec C

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Session 25 MG 220 BBA - 10 Nov 10

  1. 1. MG 220 Marketing Management BBA 09 – Sec C Fall 2010 Muhammad Talha Salam, Asst. Professor Access it online: Part 6: Delivering Value > Marketing Channels and Value Networks > The Role of Marketing Channels: SKIM > Channel-Design decisions > Channel-Management decisions: SKIM Class Presentation | Session 25 | 10 Nov 2010
  2. 2. Access it online: Marketing Channels and Value Networks The Importance of Channels Marketing Channels • Sets of independent organizations involved in the process of making a product or service available for use or consumption Among these ‘intermediaries’ are: • Merchants – who buy, take title to, and resell the merchandise – Wholesalers, Retailers • Agents – who search for consumers but do NOT take title – Brokers, Manufacturers’ representatives, sales agents • Facilitators – assist in distribution but neither take title NOR negotiate sale/purchase – Transporters, independent warehouses, ad agencies, banks Importance of Channels • A marketing channel system is the particular set of marketing channels employed by a firm. • Channels chosen affect all other marketing decisions • Push strategy involves manufacturers using its own sales force and trade promotion money to include intermediaries – Appropriate when: low brand loyalty | choice is made at purchasing time | impulse item | benefits are understood • Pull strategy involves manufacturer using advertising and promotion to persuade consumers to ask intermediaries for the product – Appr0priate when: High brand loyalty | high involvement | people perceive differences in brands | decision before going to store • Top marketing companies use both strategies MG 220 Marketing Management 2
  3. 3. Access it online: Marketing Channels and Value Networks Channel Development • A new firm typically is a local/limited operation selling in a limited market • As it grows, it moves in new markets and that is where it needs new partners to sell for it • Channel system evolves in response to local opportunities Hybrid channels • Consider IBM, Dell, Microsoft • Selling online (self), through retailers (intermediaries) – CONSUMERS • Selling using sales force (own) – INSTITUTIONAL SELLING • All operate parallel and in one market • Ensuring Channel Integration – consumers would want channels to be working together • Also understanding different needs of customers: • Habitual shoppers | High value deal seekers | Variety-loving shoppers | High-involvement shoppers MG 220 Marketing Management 3
  4. 4. Access it online: Marketing Channels and Value Networks Value Networks Demand chain planning • Company first thinks of the target market and then plans it all backwards • 4Ps replaced by SIVA (Solution | Information | Value | Access) Value Networks • An even broader view. Company at the center • A system of partnerships and alliances that a firm creates to source, augment and deliver its offerings • A value network includes: firm’s suppliers, suppliers’ suppliers, immediate customers and their end customers Demand chain planning yields several insights • Company can estimate whether more money is made upstream or downstream • Company is more aware of disturbances anywhere in the supply chain that might cause costs to change • Companies can use internet to go online to improve these processes Concept of ERP • To manage entire value networks efficiently, different IT solutions and software is extensively deployed. They form Enterprise Resource Planning (ERP) MG 220 Marketing Management 4
  5. 5. Access it online: The Role of Marketing Channels Concept Why delegate the ‘selling job’? • Many producers lack the financial resources to carry out direct marketing • Producers who do establish their own channels can often earn a greater return by increasing investment in their own business (EXAMPLE) • In some cases direct marketing simply is not feasible Reducing number of contacts • Ref: figure • With and without “D” - Distributor MG 220 Marketing Management 5
  6. 6. Access it online: The Role of Marketing Channels Channel Functions and Flows Direction of activities • Some functions have forward flow of activities • Some have backward flow • Others have two-way flow MG 220 Marketing Management 6
  7. 7. Access it online: The Role of Marketing Channels Channel Levels Key Points • Producer and End Customer are there in every case • Zero-level channel is also called direct marketing channel • Different schemes for consumer marketing and industrial marketing MG 220 Marketing Management 7
  8. 8. Access it online: Channel-Design Decisions Analyzing Customers’ Desired service output levels Service Outputs by a channel – Lot Size – number of units a channel permits a user to purchase on one occasion – Waiting & Delivery time – Avg time customers have to wait for receipt of goods – Spatial Convenience – Degree of convenience in purchasing a product – Product Variety – Assortment breadth by a marketing channel – Service Backup – Add-on services provided by a channel Establishing Objectives & Constraints • Channel objectives should be stated in terms of targeted service output levels • Channel objectives vary with product characteristics • Channel design must take into account strengths and weaknesses of different types of intermediaries • Channel design must also take into account economic environment. For instance, economic depressions lead to cost-cutting thus shorter channels. MG 220 Marketing Management 8
  9. 9. Access it online: Channel-Design Decisions Identifying Major Channel Alternatives Decisions of choosing from a wide variety of channels for reaching customers Elements for describing channel alternative: • Type of Intermediaries – Decisions regarding what type of intermediaries shall be used – Retailers or OEMs • Number of Intermediaries – Exclusive Distribution – Selective Distribution – Intensive Distribution • Terms and responsibilities of each channel member – Price Policy calls – Conditions of sale – Distributors’ territorial rights – Mutual services and responsibilities MG 220 Marketing Management 9
  10. 10. Access it online: Channel-Management Decisions After choosing, individual intermediaries need to be trained, motivated and evaluated • Selecting Channel Members • Training Channel Members • Motivating Channel Members – Channel Power – ability to alter channel members’ behavior – Coercive Power – Reward Power – Legitimate Power – Expert Power – Referent Power – how strongly members would like to be associated with the partner MG 220 Marketing Management 10
  11. 11. MG 220 Marketing Management BBA 09 – Sec C Fall 2010 Muhammad Talha Salam, Asst. Professor Access it online: Part 6: Delivering Value > Channel integration and systems: SKIM > E-Commerce Marketing Practices: SKIM > Retailing > Private Labels > Wholesaling > Market Logistics: SKIM Class Presentation | Session 26 | 15 Nov 2010