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13 Designing and Managing Integrated Marketing Channels

Chapter Questions
What is a marketing channel system and value network? What work do marketing channels perform? What decisions do companies face in designing, managing and integrating their channels? What key issues do companies face in ecommerce?

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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.

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Intermediaries
Merchants Agents Facilitators

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Hybrid Channels
Direct Online Indirect Customer expectations from channel integration
Ability to order a product online and pick it up at a convenient retail location Ability to return an onlineordered product to a nearby store Right to receive discounts based on total online and offline purchases
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Push vs. Pull Marketing


Push strategy using manufacturers sales force, trade promotion money and other means to induce intermediaries to carry, promote and sell the product to end users. Pull strategy - using advertising, promotion, and other forms of communication to persuade consumers to demand the product from intermediaries.

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What European Consumers Value

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The Role of Marketing Channels


Gather customer and other information Develop and disseminate persuasive communications to stimulate purchasing Reach agreements on price and other terms Acquire funds to finance inventories Assume risks Provide place for storage Provide buyers with payment options Oversee actual transfer of ownership
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Marketing Flows in the Marketing Channel

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Marketing Channel Levels

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Consumer Marketing Channels

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Industrial Marketing Channels

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Reverse-Flow Channels

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Designing a Marketing Channel System


Analyze customer needs Establish channel objectives Identify major channel alternatives Evaluate major channel alternatives
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Analyzing Csstomers Desired Service Output Levels


Lot size Waiting/delivery time Spatial convenience Product variety Service backup
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Establishing Objectives and Constraints


Targeted service output levels Markets chosen to serve Product characteristics Strengths and weaknesses of intermediaries Competitions channels Environmental changes

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Identifying Channel Alternatives


Types of intermediaries
(merchants, agents, facilitators)

Number of intermediaries
(exclusive, selective, intensive)

Terms and responsibilities


(price policy, sale conditions, distributors territorial rights, mutual services/responsibilities)
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Number of Intermediaries

Exclusive

Selective

Intensive

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Evaluating Major Channel Alternatives

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Break-Even Cost Chart

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Channel-Management Decisions
Selecting channel members Training and motivating channel members Evaluating channel members Modifying channel members
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Channel Power
Coercive Reward Legitimate Expert Referent

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Channel Integration and Systems


Vertical marketing systems
Corporate VMS Administered VMS Contractual VMS

Horizontal marketing systems Integrated multichannel systems

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Integrated Marketing Channel System The Hybrid Grid

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Channel Conflict and Cooperation


Channel conflict occurs when one members actions prevent another channel from achieving its goal.
Types: Vertical, Horizontal, Multichannel Causes: goal incompatibility, perception differences, dependence

Channel cooperation occurs when channel members are brought together to advance the goals of the channel, as exposed to their own potential incompatible goals.
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Strategies for Managing Channel Conflict


Strategic justification Dual compensation Superordinate goals Employee exchange Joint memberships Cooptation Diplomacy Mediation Arbitration Legal recourse

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E-Commerce
Pure-click companies
(search engines, ISPs, commerce / transaction / content / enabler sites; B2C, B2B )

Brick-and-click companies

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M-Commerce

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