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Marketing channel

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Marketing channel - Unitedworld School of Business

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Marketing channel

  1. 1. MARKETING CHANNEL A set of independent organisations involved in the process of making a product or service available for use or consumption by the consumer or business user.
  2. 2. FUNCTION OF MARKETING CHANNEL  Carrying of inventory  Demand generation  Physical Distribution  After – sale service  Extending credit to customer
  3. 3. MARKETING CHANNEL STRATEGY GROWING IN IMPORTANCE. WHY???  Search for sustainable competitive advantage.  Growing power of retailers in marketing channel.  Need to decrease the cost of distribution.  Increased role and power of Technology.  New stress on growth.
  4. 4. CHANNEL FUNCTIONS & FLOW  Physical Flow  Title Flow  Payment Flow  Promotion Flow  Information Flow
  5. 5. CHANNEL LEVELS
  6. 6. CHANNEL INTEGRATION SYSTEM
  7. 7. CHANNEL CONFLICT
  8. 8. “Channel conflict is generated when channel member’s actions prevent another channel from achieving its goals.”
  9. 9. TYPES OF CHANNEL CONFLICT Vertical Channel Conflict. Horizontal Channel Conflict. Multi – Channel Conflict.
  10. 10. VERTICAL CHANNEL CONFLICT Conflict between different levels with in the same channel. e.g.- HUL came into conflict with its distributers in Kerala on the issue of commission.
  11. 11. HORIZONTAL CHANNEL CONFLICT Conflict between members at the same level with in the channel. e.g.- Conflict between two same retail outlets.
  12. 12. MULTI-CHANNEL CONFLICT Conflict exists when the manufacturer has established two or more channels that sale same product. e.g.- Reebok has its own store and other licensed store who also sale Reebok products.
  13. 13. CAUSES OF CHANNEL CONFLICT  Goal incompatibility.  Role ambiguity.  Differences in perception.  Intermediaries' dependence on the manufacture.
  14. 14. STRATEGIES TO MANAGE CHANNEL CONFLICT  Adoption of super ordinate goals.  Exchange of employees.  Joint membership in trade association.  Co-optation.  Diplomacy, mediation, or arbitration.  Legal recourse.
  15. 15. DISTRIBUTION CHANNEL The process or channel or flow which makes the product or service available for use by the customer can be regarded as a distribution channel.
  16. 16. DISTRIBUTION FUNCTION  To meet the satisfaction level of the consumer by delivery of products to different types of customers when and where they required at a reasonable cost can be considered as one of the major function of distribution.
  17. 17. TYPICAL CHANNELS OF DISTRIBUTION
  18. 18. DISTRIBUTION FUNCTIONS  Bridge the gap between production and consumption.  Responsible for promoting, awareness regarding the produce.  Creating contacts and maintaining liaison with existing one.  Understanding customer need and adjusting the offer accordingly.  Price negotiation as per the customer demand of the product.
  19. 19. WHY INTERMEDIARIES?  Contacts  Experience  Socialisation  Scale of operation  Purpose – Match supply from producers to demand from consumers.
  20. 20. STEPS IN DISTRIBUTION PLANNING Develop Distribution Objective Evaluate Internal and External Environmental influences Choose a Distribution Strategy • Conventional, Vertical, or Horizontal system •Intensive, exclusive or selective distribution •No. Of channel levels Develop Distribution Tactics •Selecting channel members •Managing the channel •Physical distribution planning Order processing Warehousing Transportation Inventory Control
  21. 21. CHOOSING A DISTRIBUTION SYSTEM Intensive Distribution Exclusive Distribution Selective Distribution Distribution Intensity
  22. 22. MARKETING INTERMEDIARIES • MIDDLEMAN – independent link between producers and consumers • MERCHANT MIDDLEMAN – actually buys goods and takes title/ownership • AGENT – business unit that negotiates purchases and sales but does not take ownership • WHOLESALER – a merchant who primarily stores and handles goods in large quantities • RETAILER – merchant middleman who sells to final consumers • BROKER – middleman who serves as a go-between for the buyer and seller • MANUFACTURER’S AGENT – an agent who operates by contract serving a geographic territory • DISTRIBUTOR – wholesale middleman in lines with selective or exclusive distribution • JOBBER – a middleman who buys from manufacturers and sells to retailers • FACILITATING AGENT – a firm that performs distribution tasks other than buying, selling and transferring
  23. 23. CHANNEL EFFICIENCY: HOW INTERMEDIARIES REDUCE THE NUMBER OF CHANNEL TRANSACTIONS
  24. 24. CHANNELS OF DISTRIBUTION OF CONSUMER GOODS
  25. 25. TYPES OF DISTRIBUTION STRATEGIES 1. Exclusive distribution 2. Selective distribution 3. Intensive distribution
  26. 26. 1. EXCLUSIVE DISTRIBUTION SITUATION WHERE SUPPLIERS AND DISTRIBUTORS ENTER INTO AN EXCLUSIVE AGREEMENT THAT ONLY ALLOWS THE NAMED DISTRIBUTOR TO SELL A SPECIFIC PRODUCT.  Limiting the use of intermediaries  Not allowing competing brands  Maintain control **MARUTI  Exclusive dealers  Huge investments by dealers
  27. 27. 2. SELECTIVE DISTRIBUTION TYPE OF PRODUCT DISTRIBUTION THAT LIES BETWEEN INTENSIVE DISTRIBUTION AND EXCLUSIVE DISTRIBUTION, AND IN WHICH ONLY A FEW RETAIL OUTLETS COVER A SPECIFIC GEOGRAPHICAL AREA. CONSIDERED MORE SUITABLE FOR HIGH-END ITEMS SUCH AS 'DESIGNER' OR PRESTIGE GOODS.  Use of more intermediaries compared to exclusive  Need more visibility  More control  Less cost **SHAHNAZ HUSSAIN HERBAL PRODUCTS  Not available in every Grocery Shop  Available at selected outlets  Maintain image
  28. 28. 3. INTENSIVE DISTRIBUTION A MARKETING STRATEGY UNDER WHICH A COMPANY SELLS THROUGH AS MANY OUTLETS AS POSSIBLE, SO THAT THE CONSUMERS ENCOUNTER THE PRODUCT VIRTUALLY EVERYWHERE THEY GO: SUPERMARKETS, DRUG STORES, GAS STATIONS, AND THE LIKE.  As many outlets as possible  Multiple channels  Consumers widespread  Problems of control **LUX SOAPS, LIFEBUOY, COLGATE, SOFT DRINKS
  29. 29. CHANNEL MANAGEMENT
  30. 30. CHANNEL MANAGEMENT Channel Management involves the strategy, development and alignment of channels, or customer interfaces, across your marketing, sales and service processes. Channels typically include the Internet, call centers, retail stores, phones and text messaging.
  31. 31. FUNCTIONS OF INTERMEDIARIES IN DISTRIBUTION CHANNEL MANAGEMENT?  The functions of intermediaries are : 1. Availability. 2. Information. 3. Communication. 4. Negotiation. 5. Order. 6. Payment collection. 7. Financing. 8. Risk taking. 9. Title transfer.
  32. 32. SUCCESS CHANNEL MANAGEMENT Outline
  33. 33. 34 Vertical Integration: Owning the Channel Selection Criteria Channel Structure and Membership Issues Channel Implementation Building Channels
  34. 34. 35 Managing Conflict to Increase Channel Coordination Channel Power: Getting It, Using It, Keeping It Bargaining for Influence with Channel Members Key Account Management in Collaborative Relationship Building Partner Relationship Management Managing Channels
  35. 35. 36 Selection and Termination Policies Making the Plan Work Effectively Performance Measurement Implementation
  36. 36. MANAGEMENT TECHNIQUES 37
  37. 37. 38 Value and Resource Scarcity Value and Market Information Cooperation Information: The Core of Transaction Costs Transaction-Specific Assets Specific Human Assets Brand Capital Time Specificity Preparing a Marketing Plan for Channels Factors in Deriving Economic Value
  38. 38. 39 Marketing Channels Creating Customer Value via Channels of Distribution Components of Customer Value form, place, possession, and time Marketing Channels: Structure and Functions Demand-Side Factors Facilitation of Search, Adjustment of Assortment Discrepancy, Routinisat ion of Transactions Reduction in Number of Contacts. What Is The Work Of The Marketing Channel? Marketing Channel Membership Customer Relationship Management Three types of channel relationships exist: Supplier Relationships. Customer Relationships. Lateral Relationships. Sifting the cycle Marketing Channels
  39. 39. 40 Channel Design and Implementation Channel Design: Segmentation Channel Selection Channels Type Options: Establish New Channels or Refine Existing Channels? Channel Access Formats
  40. 40. 41 Distributor and Agent Selection Criteria Recruiting and Screening New Prospects Recruiting as a Continuous Process. Screening Credit Personality Business and Operational Criteria Final Selection Criteria Channel Candidate Inducements Business Policies that Bond Your Channel to You Preparing a Business Policy Statement Distributor and Agent Selection Criteria
  41. 41. 42 Managing Conflict to Increase Channel Coordination Forms of Channel Conflict Assessing the Degree and Nature of Channel Conflict Measuring Conflict When Conflict Is Desirable When Is Conflict Functional? Major Sources of Conflict Competing Goals Differing Perceptions of Reality Clashes Over Domains Multiple Channels Fuelling Conflict Conflict Resolution Strategies Co-optation Third-Party Mechanisms Building Relational Norms Information Exchange Styles of Conflict Resolution Accommodation Repeated Compromise Competition Collaboration Managing Conflict to Increase Channel Coordination
  42. 42. 43 Legal Constraints on Marketing Channel Policies Market Coverage Policies Pricing Policies Discounts Product Policies Exclusive Dealing Product Line Policies Promotional Allowances and Services Legal Issues
  43. 43. 44 Channels for Services Direct Delivery of Value Delivery of Value via Intermediaries Independent Service Channels Innovations in Methods of Distributing Services Channels for Services
  44. 44. IBM Marketing channel Management Clips….
  45. 45. CAMPUS OVERVIEW 907/A Uvarshad, Gandhinagar Highway, Ahmedabad – 382422. Ahmedabad Kolkata Infinity Benchmark, 10th Floor, Plot G1, Block EP & GP, Sector V, Salt-Lake, Kolkata – 700091. Mumbai Goldline Business Centre Linkway Estate, Next to Chincholi Fire Brigade, Malad (West), Mumbai – 400 064.

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