Integrated Marketing Channels

1. Designing & Managing

2. Submitted to:
Prof.(Dr.) J.D. Jadeja
Dean
Faculty of Management Studies
The M.S. University of Baroda
Prepared by:
Brahmbhatt Bhumika J.
Parekh Neera B.
Jha Rashmi U.
Kanani Akash J.
Dabasara Anand K.
Year:2014-15

3. Marketing Channels
• Marketing Channels are set of interdependent
organizations (intermediaries) participating in the process
of making a product or service available for use to end
user.
• For example: 1) Merchants
2) Agents
3) Facilitators
• Companies are looking at their suppliers’ suppliers
upstream and at their distributors’ customers downstream.

4. Value Addition takes place by consumer’s bill payment & not by retailer’s payment

5. Integrated Marketing Channels
• It is when a single firm uses two or more marketing
channels to reach customer segments.
For example- LIC, Flipkart, HPCL, etc.
• Each channel should target a different segment of buyers,
or different need states for one buyer. If a company fails
to do so, that will give birth to channel conflicts,
excessive cost, or inefficient demand.
• For example- Xiaomi, a Chinese mobile manufacturer,
has decided to sell its Mi series mobiles at Brick &
Mortar stores (The mobile Store). Earlier it gave selling
rights to sole retailer i.e. Flipkart.

7. • With the increasing sophistication of technology, the
number of channels available to a customer is increasing.
• At the same time, it can be a bit difficult for companies to
manage the flow of communications through these
channels.
Consumers expect:
• Order a product online and pick it up at a convenient retail
location
• Return an online-ordered product to a nearby store of the
retailer.
• Receive discounts and promotional offers based on total
online and offline purchases.

9. Value Networks
• A set of connections between organizations and/or
individuals interacting with each other to benefit the entire
group.
• Each member relies on the others to foster growth and
increase value.
• Marketers, have traditionally focused on the downstream
side of the value network, adopting customer relationship
management software and practices.
• In the future, they will increasingly participate in their
companies’ upstream activities.

12. Channel Member Functions
• Gather information about potential and current customers,
competitors, and other actors and forces in marketing
environment.
• Develop persuasive communications to stimulate
purchasing.
• Negotiate and reach agreements on price and terms.
• Place orders with manufacturers.
• Acquire the funds to finance inventories at different levels
in the marketing channel.

13. Continue…
• Assume risk connected with carrying out
channel work.
• Provide for the successive storage and
movement of physical products.
• Oversee actual transfer of ownership from one
organization or person to another.

14. Marketing Flows in the Marketing Channel

15. Consumer Marketing Channels

16. Industrial Marketing Channels

17. How should channels be designed?
Analyze customer
needs and Wants
Establish channel
objectives
Identify major channel
alternatives
Evaluate major channel
alternatives

18. Analyze Customer Needs and Wants
• Consumer may choose channels based on
 Price
 Product assortment
 Convenience
 Own shopping goals

19. Channel Service Outputs
• Lot size
• Waiting/delivery time
• Spatial convenience
• Product variety
• Service backup

20. Establish Channel Objectives
• Channel objective vary with product characteristics.
Like……
• Bulky products
• Non standard products
• High unit value products
Ex Apple store

21. Identify Major Channel Alternatives
• Types of intermediaries

22. Identify Major Channel Alternatives
• Number of intermediaries
1. Intensive distribution
Stocking the product in as many outlets as
possible.
EX – Toothpaste, Soap, soft drinks, snack foods, candy
and ice cream.

23. 2. Exclusive distribution
Giving a limited number of dealers the exclusive Right to
distribute the company’s products in their territories.
EX – Luxury automobiles and prestige women’s
clothing.

24. 3. Selective distribution
• The use of more than one, but fewer than all, of the
intermediaries who are willing to carry the
company’s products.
Ex – Most television, furniture, home appliance brands
Whirlpool and General Electric

25. Identify Major Channel Alternatives
• Terms and responsibilities
Producers intermediaries
– Price policies
– Conditions of sale
– Territorial rights
– Mutual services and responsibilities

26. Evaluate major Channel Alternatives
• Economic Criteria:
– Each channel alternative will produce a different
level of sales & costs.
• Control & Adaptive Criteria:
– Using a sales agency can pose a control problem.
Agents may concentrate on the customers who buy
the most, not necessarily those who buy the
manufacturer’s goods. .

27. The Value-Adds vs. Costs of Different
Channels

28. Break-Even Chart for the Choice Between a
Company Sales Force and Manufacturer’s Sales
Agency

29. Channel-Management Decisions
• Selecting channel members
• Training channel members
• Motivating channel members
• Evaluating channel members
• Modifying channel design

30. 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

31. Training and Motivating Channel Members
• Channel power
Ability to alter behavior of intermediaries so that they
can think out-of-box.
• Powers a manufacturer posses to elicit cooperation
from intermediaries:-
1. Coercive power
Threatening intermediaries to terminate relationship if
they fail to cooperate

32. 2. Reward power:Offering extra benefits on performing
specific act or function.
3. Legitimate Power: Request for behavior that is
warranted under contract.
4. Expert Power: Having a special knowledge that
intermediaries value and doesn’t posses.
5. Referent power: The manufacturer is so highly
respected that intermediaries are proud to be associated
with it.

33. Evaluating Channel Members
• Manufacturers regularly check performance against
standards such as
Sales quota, inventory levels, customer delivery time,
treatment of damaged and lost goods and cooperation in
promotional and training programs.

34. Modifying Channel Design
• No channel strategy remains effective over the whole product
life cycle. In competitive markets with low entry barriers, the
optimal channel structure will inevitably change over time.
• Channel Evolution
• Channel modification Decisions
A producer must periodically review & modify its channel
design & arrangements.
• Global channel Considerations
International markets pose distinct challenges, including
variations in customers shopping habits, but opportunities at
the same time.

35. Conflict, Cooperation and
Competition

36. Types of Conflict and Coordination
Horizontal Channel Conflict
Vertical Channel Conflict
Multichannel Conflict

37. Causes of
Channel
Conflict
Goal
Incompatibility
Unclear roles
& rights
Differences in
perception
Intermediaries
dependence on
the
manufacturer

38. Strategic
Justification
Managing Channel
Conflict
Dual
Compensation
Super ordinate
goals
Employee
exchange
Joint
Membership
Co-optation
Diplomacy,
mediation &
arbitration
Legal
recourse

39. Dilution and Cannibalization
• Marketers should not dilute brands through
inappropriate channels
Legal and ethical issues in channel
Relations
• legality of certain practice is considered
through following points:

40. Exclusive
Dealings
Tying
Agreements
Exclusive
Territories
Dealers’
Rights

41. E-Commerce
• What is E-commerce?
Commercial transactions conducted
electronically on the Internet.

42. Why E-commerce?
Convenient
Informative
Personalized
Experience
Customers?
Saving the
cost of Retail
floor shop
Reduction in
Staff cost
Less
Inventory
Companies?

43. Type of E-commerce
B2C B2B
C2B C2C

44. Pure- Click Companies:
Those who have
launched their website
without any previous
existence

45. E-commerce Success Factors:
• Shoppers fail to complete the transactions-
Improve a conversion rate
 Make website fast, easy and simple
• Absence of pleasurable Experience , Social
interactions, Personal Consultation
 Live online chat, Virtual Environment, Blogs
and videos

46. Continue…
• To increase Customer Satisfaction and
Informative Value
 “ AVATARS”- Graphical representative of
virtual, Animated characters that act as a
company representative, Personal Shopping
Agents, Website Guide or Conversation
Partner
• Ensuring Security and Privacy is important

47. B2B E-Commerce
• It gives easy access to a great deal of
Information from:
1. Suppliers Websites
2. Infomediaries
3. Market Makers
4. Consumer Communities

48. Market Makers:
These are the third
parties that link
between buyers and
sellers
Infomediaries:
These are the third party
that add value by
aggregating information
about alternatives
Customer Services:
Where buyer can
swap stories about
supplier’s product
and services.

49. Brick and Click
Companies:
Existing company
that have added
an online website.

51. M-Commerce
• Commercial transactions conducted
electronically by mobile phone.
• 2009-USA, Japan
• Smart Phones
• 3G

52. Mobile App Mobile Banking

53. Contemporary Channel Scenario in
India
• More and more firm take to a Multi- Channel
Model
• Online of Channel Arrangement become More
Pronounced
• Radical Changes are taking place on the Retail
Front
1. Ascendancy of Multi-Format Retailing
2. Spread of Modern Format Stores

54. • Conventional Wholesale- Retail Trade
Continues as the Mainstay
• Image and Profile of the Trade Undergo a
change
1. Distributors keep expanding and diversifying
2. Distributing outfits, however, are still mostly
family owned
• Trade Margins Escalate as Costs of
Distribution keep Growing

55. • Power Equation among the Distribution
Triumvirate Shifts in favor of the Lower Levels
• Distributors are becoming Choosy
• Firms go in for different forms of Non-
traditional Channel Arrangements
• Firms Embrace different Forms of Direct
Marketing

56. Case Study
on

57. • In 1985, Dell changed his strategy to begin
offering built-to-order computers. That year,
the company generated $70 million in sales.
Five years later, revenues had climbed to $500
million, and by the end of 2000, Dell’s
revenues had topped an astounding $25 billion.

58. Continue…
• The meteoric rise of Dell Computers was
largely due to the implementation of a
novel distribution strategy.

59. No more
middlemen
Virtual Integration
Innovation on the
assembly floor

60. Key
Lessons
Disintermediation
Enhancing
customer value
Process and
operations
innovation
Let data do
the driving

61. References:
• Marketing Management( A South Asian
Perspective) – Philip Kotler, Kevin Lane Keller,
Abraham Koshy, Mithileshwar Jha
• Marketing Management ( Global Perspective-
Indian Context)- V S Ramaswamy, S Namakumari