SlideShare una empresa de Scribd logo
1 de 53
Descargar para leer sin conexión
Designing and Managing Integrated
       Marketing Channels

          Presented By:-
          Pranjal Mathur
Marketing channels and Value
              networks
• Chief role is to convert potential buyers to
  profitable customers.
• Firm’s pricing depends on selection of
  marketing channels.
• Choice of channel depends on marketing
  strategy with respect to
  segmentation, targeting and positioning.
Marketing
     Strategy

  Push       Pull
Strategy   Strategy
Push Strategy
• Push strategy:- Producers induce intermediaries
  to carry, promote and sell products and services
  to end users through its sales force, trade
  promotions and other means.
• Appropriate when:-
1. Brand loyalty is high.
2. Brand selection at the spot.
3. Product is an impulse item.
4. Product benefits are well understood.
Pull Strategy
• Pull strategy:- Customers are persuaded through
  promotional and advertising campaigns to
  demand the product, which induces
  intermediaries to order it from producer.
• Appropriate when:-
1. Brand loyalty is high.
2. High involvement product.
3. Brand distinction is possible.
4. Brand selection prior to purchase.
Channel Development
• Deciding best channel is not a problem but
  convincing the available intermediaries to handle
  firm’s product is a difficult task.
• Smaller markets – directly through retailers.
• Larger markets – through distributors.
• Rural markets – through local merchants.
• Channel system evolves as a function of -
1. Local opportunities.
2. Emerging threats.
3. company’s resources and capabilities.
Hybrid Channels / “Go-to Markets”
• Example to understand:-
HP uses:-
1. Sales force – large accounts.
2. Outbound telemarketing – medium size
   accounts.
3. Direct mail – small accounts.
4. Retailers – still smaller accounts.
5. Internet – specialty item orders.
• To mange hybrid channels, company must make
  sure that these channels:-
1. Work well together.
2. Match each target customer’s preferred way of
   doing business.
• Features expected by customers in a hybrid
  channel:-
1. Ability to order online and pick it up from a
   convenient retail store.
2. ability to return the ordered product back to a
   nearby retail store.
3. Right to discounts and promotional offers.
Understanding Customer’s Needs
• Factors based on which customers chooses a
  particular channel are :-
1. Price.
2. Product assortment.
3. Convenience.
4. Own shopping goals like economic, social and
   experimental.
• According to Nunes and Cespades customers fall
  into four categories :-
1. Habitual shoppers:- purchase from same place
   in same manner over time.
2. High value deal seekers:- buyers who know their
   needs and survey to a great deal to buy at
   lowest possible price.
3. Variety loving shoppers:- gathers info from many
   channels and buy from favorable channels
   regardless of price.
4. High involvement buyers:- gathers info from all
   possible channels, buy from low cost channels
   and take advantage of customer support from
   high-touch channel.
Value Networks
• Demand-chain planning:- when a firm first thinks of
  market and then design supply chain backwards from
  market to firm.
• Value networks is a system of partnerships and
  alliances that a firm creates to source, augment and
  deliver its offerings to the end user.
• A value network includes:-
1. Firm’s suppliers.
2. Its supplier’s supplier.
3. Its intermediate customers.
4. End customers.
• Various insights of demand-chain planning:-
1. Company can determine whether more
   money is upstream or downstream this will
   help in integrating backward or forward.
2. Company is more aware of disturbances
   anywhere in supply chain that might cause
   costs, price or supplies to change suddenly.
3. Companies can go online with their business
   partners to carry on faster and more accurate
   communications, transactions and payments
   to reduce costs and speed up information
   and increase accuracy.
• Managing value networks requires investment
  in IT(Information and Technology) and soft
  wares.
• SAP and Oracle ERP systems to manage cash
  flows, manufacturing, human resources,
  purchasing and other functions within a
  unified framework.
Roles of Marketing Channels
• Producer gain effectiveness and efficiency by
  using intermediaries through:-
1. Contacts.
2. Experience.
3. Scale of operation.
4. Specialization.
• Make available goods and services widely
  available to target market.
Channel Function and Flows
• Functions that are performed by channel members
  are:-
1. Gathers information about potential and current
   customers and competitors.
2. Develop and disseminate persuasive information to
   stimulate purchasing.
3. Place orders with manufacturers.
4. Reach agreements on price and other terms so that
   transfer of ownership or possession can be affected.
5. Assume risk connected with channel work.
6. Provide for storage and movement of goods.
7. Provide for buyer’s payment of their bills through
   banks and other financial institutions.
• Physical product transfer, title and promotional
  processes constitute a forward flow of activity
  from company to customers.
• Ordering and payment processes constitute a
  backward flow of activity from customers to
  company.
• Information, negotiation, finance and risk taking
  processes take place in both the directions.
• A manufacturer selling a physical product or
  service might require only three channels:-
1. Sales channel.
2. Distribution channel.
3. Service channel.
• All channel functions have three things in
  common:-
1. They use up scarce resources.
2. They can be performed better through
    specialization.
3. They can be shifted among channel
    members.
• If intermediaries are more efficient than
  manufacturers, prices to customers should be
  lower.
• If consumer’s perform some work by
  themselves they can enjoy even lower prices.
Channel Levels
• The producers and final customers are part of
  every channel.
• A zero level channel consists of a manufacturer
  selling directly to final customers.(Tupperware,
  Bata, BPCL)
• The one level channel contains one selling
  intermediary such as retailer.
• Two level channel contains two intermediaries
  such as wholesalers and retailers.
• Three level channel contains three intermediaries
  such as distributors, wholesalers and retailers.
• Channel normally describe a forward
  movement of products from source to user.
• But there are reverse flow channels which are
  important in following cases:-
1. Reuse of products or containers (cold drink
   bottles).
2. Recycle of products (paper).
3. Disposal of products and packaging.
Channel-Design Decisions
• Designing a marketing channel requires:-
1. Analyzing customer needs.
2. Establishing channel objectives.
3. Evaluating major channel alternatives.
1. Analyzing Customer Needs
• Channels produce five service outputs:-
1. Lot Size:- the number of units the channel permits a
   typical customer to purchase on one occasion.
2. Waiting and Delivery Time:- the average time
   customers wait for receipt of goods.
3. Spatial Convenience:- Bata and Exide batteries have
   made it easier for consumers to access them.
4. Product Variety:- assortment breadth provided by
   marketing channels.
5. Service Backup:- the add-on services (credit, delivery
   installation, repairs) provided by channel .
2.Establishing Objectives and
                 Constraints
• Marketers should state their channel objectives in term of
  targeted service output levels.
• Channel institutions should arrange their functional tasks to
  minimize total channel costs and still provides desired level
  of service outputs.
• Channel objectives vary with product characteristics :-
1. Perishable products - direct marketing.
2. Bulky products - channels that minimize shipping distance
   and amount of handling.
3. Custom built machinery - company sales representatives.
4. Products requiring installations and regular check ups –
   company owned or leased franchisees.
3. Identifying and Evaluating major
         Channel Alternatives
• A firm can choose from a wide variety channels
  for reaching customers:-
1. Sales force – complex product and transactions.
2. Internet – less expensive but not effective with
   complex products.
3. Distributors – can create sales but contact with
   customers is lost.
4. Manufacturer representatives – reach to
   different segment of customers and delivers the
   right product at low cost. If fails then leads to
   channel conflicts and excessive costs.
Number of Intermediaries
• A firm can decide on number of
  intermediaries to use at each level by using
  these three strategies :-
1. Exclusive distribution.
2. Selective distribution.
3. Intensive distribution.
Exclusive Distribution
• Appropriate when manufacturer wants to
  maintain a strict control over service level and
  outputs offered by resellers.
• Requires a closer partnership with
  intermediaries.
• Used in distribution of automobiles, earth
  movers etc.
• Example:- Gucci
Selective Distribution
• Relies on more than a few but less than all of
  intermediaries.
• A company can gain adequate market
  coverage with less cost and more control.
Intensive Distribution
• Goods and services are kept in as many stores
  as possible.
• These strategies are generally used for
  perishable products such as snacks, soft-
  drinks, newspapers etc.
• Intensive distribution increases product
  availability and service but encourages
  retailers to compete aggressively.
• Ex. :- Titan watches.
Terms and Responsibilities of Channel
             Members
• Each channel member must be treated
  respectfully and must be given opportunity to
  be profitable.
• Main policies are:-
1. Price policies.
2. Condition of scales.
3. Territorial rights.
4. Mutual services and responsibilities.
• Price policies:- A producer should establish a
  price-list and schedule of discounts and
  allowances.
• Conditions of sales:- Refers to payment terms and
  producer guarantees. Provision for trade
  discounts on bulk orders or purchases. Guarantee
  against defective merchandise or price declines.
• Distributor’s territorial rights:- Definition of
  distributor's territories and terms under which
  distributor will enfranchise with other
  distributors.
• Mutual services and responsibilities:- Example
  of McDonald’s –
McDonald’s provides:-
1. Franchisee with a building.
2. Promotional support.
3. Record keeping system.
4. Training.
5. General administrative and technical
   assistance.
• In return franchisees are expected to :-
1. Satisfy company standards.
2. Cooperate with promotional offers.
3. Furnish required information and buy
   supplies from specified suppliers or vendors.
Channel-Management Decisions
• After a channel has been chosen, company
  must :-
1. Select.
2. Train.
3. Motivate.
     individual intermediaries for each channel.
1. 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.
2. Training and Motivating Channel
               Members
• A company should view its intermediaries as
  end-users.
• Needs and wants of intermediaries are
  compulsory to stimulate them to top-level
  performance.
• For ex.:- Microsoft.
• 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.
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.
• Efficient Consumer Response (ECR) opted by
  manufacturer and intermediaries to
  streamline supply chain and cut costs.
• ECR organizes relationship between
  manufacturer and intermediaries in two
  areas:-
1. Demand side management:- collaborative
   activities to stimulate demand from
   consumer side by promoting joint marketing
   and sales activities.
2. Supply side management:- collaborative
   practices to optimize supply.
3. Evaluating Channel Members
• Manufacturers regularly check performance
  against standards such as:-
sales quotas, inventory levels, customer delivery
time, treatment of damaged and lost goods and
cooperation in promotional and training
programs.
Modifying Channel Design
• A channel is modified when:-
1. Channel is not working well as planned.
2. Consumer buying pattern change.
3. Market expands.
4. New competition arises.
5. Product moves into latter stage of its product
   life cycle.
Channel Integration System

         Marketing
          Systems


Horizontal         Vertical
Marketing         Marketing
 Systems           Systems
Horizontal Marketing System
• A horizontal marketing system is one in which
  two or more unrelated companies put
  together resources or programs to exploit an
  emerging market opportunity.
• Each one lacks capital, know how production,
  marketing resources to venture alone.
• Companies might work with each other on
  temporary or permanent basis.
Vertical Marketing System
• The producer, wholesaler and retailer acts a
  unified system.
• One channel member, the channel captain
  owns the others or franchises them has so
  much power that they all cooperate.
• VMS arose as a result of strong channel
  members’ attempt to control behavior and
  eliminate the conflict.
Vertical Marketing
                           System


                       Administered          Contractual
Corporate Vertical
                     Vertical Marketing   Vertical Marketing
Marketing System
                           System               System
• Corporate Vertical Marketing System:- It
  combines successive stages of production and
  distribution under single ownership.
• Administered Vertical Marketing System:- It
  coordinates successive stages of production
  and distribution through size and power of
  one of the members.
• Contractual Vertical Marketing System:- It
  consists of independent firms at different
  levels of production and distribution, in order
  to obtain more economies or sales impact
  what they had achieved alone.
Contractual
                  Vertical Marketing
                       Systems


 Wholesalers
                      Retailer          Franchisee
  Sponsored
                    Cooperatives       Organizations
Voluntary Chain
• Wholesalers Sponsored Voluntary Chain:-
  Wholesalers organize voluntary chains of retailers
  to help them standardize their selling practices
  and help them achieve buying economies in
  order to compete with large chain organizations.
• Retailer Cooperatives:- Retailers take the initiative
  and organize new business entity to carry on
  wholesaling with some production. Members
  concentrate their purchases through retailer co-
  op and plan their advertising jointly. Profits pass
  back to members in proportion to their purchase.
• Franchisee Organization:- A channel member
  called franchisor might link several successive
  stage in the production-distribution process.
Conflict, Cooperation and Competition
• Channel conflict is generated when one
  channel members’ action prevent another
  channel from achieving its goals.
• Channel coordination occurs when channel
  members are brought together to advance
  goals of the channel as opposed to their own
  potentially incompatible goals.
Types of Conflict
Conflict
           Causes of Conflict

              Managing
              Conflicts
Causes of Channel Conflict
• Conflicts may arise from:-
1. Goal incompatibility :- Manufacturers want
   to achieve rapid market penetration through
   low price policy.
2. Unclear Roles and Rights :- HP may sell
   personal computers to large accounts
   through its own sales force, but its licensed
   dealers may also be trying to sell to large
   accounts.
3. Differences in Perception:- Disputes between
   manufacturers and distributors about
   optimal advertising strategy.
4. Intermediaries Dependence on Manufacturer
   :- Fortune of exclusive dealers depend totally
   upon manufacturers’ products and pricing
   decisions which creates high potential for
   conflict.
Managing Channel Conflict
• Various mechanisms of managing conflicts
  are:-
1. Adoption of Superordinate Goal:- Channel
   members come to an agreement on
   fundamental goals they are jointly
   seeking, weather it is survival, market
   share, high quality or customer satisfaction.
2. Exchange of Employees
3. Joint Membership in Trade Association:- The
   manufacturer and the intermediaries come
   together in good cooperation which may lead to
   better understanding between them.
4. Co-option:- It is an effort by one organization to
   win the support of leaders of other organization
   by including them in advisory council, board of
   directors, which reduces the chances of
   conflicts.
5. Diplomacy, Mediation or Arbitration:- when
   conflict is chronic, the companies may need to
   resort to diplomacy, mediation or arbitration.
i. Diplomacy:- It takes place when each sends a
     person or groups to meet with its
     counterparts to resolve the conflict.
ii. Mediation:- It means resorting to a neutral
     third party skilled in conciliating the two
     parties interest.
iii. Arbitration:- It occurs when both the parties
     agree to present their arguments to one or
     more arbitrators and accept their decisions.
6. Legal Recourse:- when none of the above
     methods prove effective, company or
     channel partners may choose to file a law
     suit.
The End

Más contenido relacionado

La actualidad más candente

Pricing strategies - Marketing
Pricing strategies - MarketingPricing strategies - Marketing
Pricing strategies - MarketingFaHaD .H. NooR
 
Setting Product Strategy / Marketing Management By kotler Keller
Setting Product Strategy / Marketing Management By kotler KellerSetting Product Strategy / Marketing Management By kotler Keller
Setting Product Strategy / Marketing Management By kotler KellerChoudhry Asad
 
How to choose the most attractive target markets.
How to choose the most attractive target markets.How to choose the most attractive target markets.
How to choose the most attractive target markets.Sameer Mathur
 
Motivating the channel members
Motivating the channel membersMotivating the channel members
Motivating the channel membersShwetanshu Gupta
 
Channel design and channel management decision
Channel design and channel management decisionChannel design and channel management decision
Channel design and channel management decisionMuskan Mariyam
 
Service market segmentation and targeting
Service market segmentation and targetingService market segmentation and targeting
Service market segmentation and targetingManvi Sehgal
 
Integrated service marketing communication with example
Integrated service marketing  communication with exampleIntegrated service marketing  communication with example
Integrated service marketing communication with exampleRadhika Venkat
 
DISTRIBUTION CHANNELS
DISTRIBUTION CHANNELSDISTRIBUTION CHANNELS
DISTRIBUTION CHANNELSRajesh kumar
 
Marketing information systems and marketing research
Marketing information systems and marketing researchMarketing information systems and marketing research
Marketing information systems and marketing researchDr. J. Jayapradha Varma
 
Developing Pricing Strategy
Developing Pricing StrategyDeveloping Pricing Strategy
Developing Pricing StrategyChoudhry Asad
 
Consumer behavior in service
Consumer behavior in serviceConsumer behavior in service
Consumer behavior in serviceDr. Sneha Sharma
 
Services distributions
Services distributionsServices distributions
Services distributionsAnkur Kumar
 
Pricing strategy
Pricing strategyPricing strategy
Pricing strategyparth79
 
PPT on pricing strategies
PPT on pricing strategiesPPT on pricing strategies
PPT on pricing strategiesITC Limited
 
Designing and managing integrated marketing communication
Designing and managing integrated marketing communicationDesigning and managing integrated marketing communication
Designing and managing integrated marketing communicationRohit Kumar
 

La actualidad más candente (20)

Pricing strategies - Marketing
Pricing strategies - MarketingPricing strategies - Marketing
Pricing strategies - Marketing
 
Setting Product Strategy / Marketing Management By kotler Keller
Setting Product Strategy / Marketing Management By kotler KellerSetting Product Strategy / Marketing Management By kotler Keller
Setting Product Strategy / Marketing Management By kotler Keller
 
How to choose the most attractive target markets.
How to choose the most attractive target markets.How to choose the most attractive target markets.
How to choose the most attractive target markets.
 
Motivating the channel members
Motivating the channel membersMotivating the channel members
Motivating the channel members
 
Distribution strategy
Distribution strategyDistribution strategy
Distribution strategy
 
Channel design and channel management decision
Channel design and channel management decisionChannel design and channel management decision
Channel design and channel management decision
 
Service market segmentation and targeting
Service market segmentation and targetingService market segmentation and targeting
Service market segmentation and targeting
 
Integrated service marketing communication with example
Integrated service marketing  communication with exampleIntegrated service marketing  communication with example
Integrated service marketing communication with example
 
Market targeting
Market targetingMarket targeting
Market targeting
 
DISTRIBUTION CHANNELS
DISTRIBUTION CHANNELSDISTRIBUTION CHANNELS
DISTRIBUTION CHANNELS
 
Marketing information systems and marketing research
Marketing information systems and marketing researchMarketing information systems and marketing research
Marketing information systems and marketing research
 
Developing Pricing Strategy
Developing Pricing StrategyDeveloping Pricing Strategy
Developing Pricing Strategy
 
Differentiation strategy
Differentiation strategyDifferentiation strategy
Differentiation strategy
 
Consumer behavior in service
Consumer behavior in serviceConsumer behavior in service
Consumer behavior in service
 
Services distributions
Services distributionsServices distributions
Services distributions
 
Pricing strategy
Pricing strategyPricing strategy
Pricing strategy
 
Channels of Distribution ppt
Channels of Distribution pptChannels of Distribution ppt
Channels of Distribution ppt
 
Channels of distribution
Channels of distributionChannels of distribution
Channels of distribution
 
PPT on pricing strategies
PPT on pricing strategiesPPT on pricing strategies
PPT on pricing strategies
 
Designing and managing integrated marketing communication
Designing and managing integrated marketing communicationDesigning and managing integrated marketing communication
Designing and managing integrated marketing communication
 

Destacado

Chapter 17 - Designing and Managing Integrated Marketing Communications
Chapter 17 - Designing and Managing Integrated Marketing CommunicationsChapter 17 - Designing and Managing Integrated Marketing Communications
Chapter 17 - Designing and Managing Integrated Marketing CommunicationsDr. Ankit Kesharwani
 
tiến trình STP và chiến lược 4P của Vinamilk
tiến trình STP và chiến lược 4P của Vinamilktiến trình STP và chiến lược 4P của Vinamilk
tiến trình STP và chiến lược 4P của VinamilkNam Nguyễn
 
Best Practices for Channel Incentive Programs
Best Practices for Channel Incentive ProgramsBest Practices for Channel Incentive Programs
Best Practices for Channel Incentive ProgramsChannelinsight
 
Channel Incentives And Loyalty Programs
Channel Incentives And Loyalty ProgramsChannel Incentives And Loyalty Programs
Channel Incentives And Loyalty ProgramsChannel Sales
 
MKT CB - Chương 5: Chiến lược S-T-P
MKT CB - Chương 5: Chiến lược S-T-PMKT CB - Chương 5: Chiến lược S-T-P
MKT CB - Chương 5: Chiến lược S-T-PThe Marketing Corner
 
Integration strategy
Integration strategyIntegration strategy
Integration strategyM. Umair
 
Marketing Channels
Marketing ChannelsMarketing Channels
Marketing ChannelsJyoti Batra
 
Distribution channels marketing management ppt
Distribution channels marketing management pptDistribution channels marketing management ppt
Distribution channels marketing management pptGanesh Asokan
 

Destacado (15)

Chapter 17 - Designing and Managing Integrated Marketing Communications
Chapter 17 - Designing and Managing Integrated Marketing CommunicationsChapter 17 - Designing and Managing Integrated Marketing Communications
Chapter 17 - Designing and Managing Integrated Marketing Communications
 
tiến trình STP và chiến lược 4P của Vinamilk
tiến trình STP và chiến lược 4P của Vinamilktiến trình STP và chiến lược 4P của Vinamilk
tiến trình STP và chiến lược 4P của Vinamilk
 
Best Practices for Channel Incentive Programs
Best Practices for Channel Incentive ProgramsBest Practices for Channel Incentive Programs
Best Practices for Channel Incentive Programs
 
Channel Incentives And Loyalty Programs
Channel Incentives And Loyalty ProgramsChannel Incentives And Loyalty Programs
Channel Incentives And Loyalty Programs
 
Channel Partner Management
Channel Partner ManagementChannel Partner Management
Channel Partner Management
 
MKT CB - Chương 5: Chiến lược S-T-P
MKT CB - Chương 5: Chiến lược S-T-PMKT CB - Chương 5: Chiến lược S-T-P
MKT CB - Chương 5: Chiến lược S-T-P
 
Vertical Integration
Vertical IntegrationVertical Integration
Vertical Integration
 
Retailing
RetailingRetailing
Retailing
 
Strategic Alliances
Strategic AlliancesStrategic Alliances
Strategic Alliances
 
Integration strategy
Integration strategyIntegration strategy
Integration strategy
 
Marketing Channels
Marketing ChannelsMarketing Channels
Marketing Channels
 
Channel conflicts
Channel conflictsChannel conflicts
Channel conflicts
 
Strategic Alliance
Strategic AllianceStrategic Alliance
Strategic Alliance
 
Distribution channels marketing management ppt
Distribution channels marketing management pptDistribution channels marketing management ppt
Distribution channels marketing management ppt
 
Channel Program
Channel ProgramChannel Program
Channel Program
 

Similar a Designing and managing integrated marketing channels

Designing & managing integrated marketing channels-Kirit Kene
Designing & managing integrated marketing channels-Kirit KeneDesigning & managing integrated marketing channels-Kirit Kene
Designing & managing integrated marketing channels-Kirit KeneKiritKene
 
Delivering Value: Designing & Managing Integrated Marketing Channels
Delivering Value:Designing & ManagingIntegrated Marketing ChannelsDelivering Value:Designing & ManagingIntegrated Marketing Channels
Delivering Value: Designing & Managing Integrated Marketing Channels Choudhry Asad
 
Marketing channels
Marketing channelsMarketing channels
Marketing channelsMehfuz Patel
 
channel marketing, selection, vertical marketing
channel marketing, selection, vertical marketing channel marketing, selection, vertical marketing
channel marketing, selection, vertical marketing Nishant Pahad
 
Marketing channels, retailers and wholesalers
Marketing channels, retailers and wholesalersMarketing channels, retailers and wholesalers
Marketing channels, retailers and wholesalersMayanka Singh
 
Marketing channel & supply chain management (principles of marketing)
Marketing channel & supply chain management (principles of marketing)Marketing channel & supply chain management (principles of marketing)
Marketing channel & supply chain management (principles of marketing)Denni Domingo
 
channels.ppt#distribution#channel#imp notes about management
channels.ppt#distribution#channel#imp notes about managementchannels.ppt#distribution#channel#imp notes about management
channels.ppt#distribution#channel#imp notes about managementDeeshaKhamar1
 
Com. marketing ppt
Com. marketing pptCom. marketing ppt
Com. marketing pptDurrgesh S
 
Com. marketing ppt
Com. marketing pptCom. marketing ppt
Com. marketing pptDurrgesh S
 
Business marketing channels
Business marketing channelsBusiness marketing channels
Business marketing channelsAli Heydari
 
Marketing Channels
Marketing ChannelsMarketing Channels
Marketing ChannelsGaurav Kar
 
Business marketing -module_3
Business marketing -module_3Business marketing -module_3
Business marketing -module_3Ashish Sahu
 
Marketing Channels.pptx
Marketing Channels.pptxMarketing Channels.pptx
Marketing Channels.pptxssuser3d6e94
 
Mktg 3_07 PPT STUDENTS_1.ppt
Mktg 3_07 PPT STUDENTS_1.pptMktg 3_07 PPT STUDENTS_1.ppt
Mktg 3_07 PPT STUDENTS_1.pptssuserdc3fc61
 
Mktg%203_07%20PPT%20STUDENTS_1.pptx
Mktg%203_07%20PPT%20STUDENTS_1.pptxMktg%203_07%20PPT%20STUDENTS_1.pptx
Mktg%203_07%20PPT%20STUDENTS_1.pptxHarini Sai
 
CHANNEL MANGEMENT/DISTRIBUTION.ppt
CHANNEL MANGEMENT/DISTRIBUTION.pptCHANNEL MANGEMENT/DISTRIBUTION.ppt
CHANNEL MANGEMENT/DISTRIBUTION.pptPriyanshuTrivedi5
 

Similar a Designing and managing integrated marketing channels (20)

Designing & managing integrated marketing channels-Kirit Kene
Designing & managing integrated marketing channels-Kirit KeneDesigning & managing integrated marketing channels-Kirit Kene
Designing & managing integrated marketing channels-Kirit Kene
 
Delivering Value: Designing & Managing Integrated Marketing Channels
Delivering Value:Designing & ManagingIntegrated Marketing ChannelsDelivering Value:Designing & ManagingIntegrated Marketing Channels
Delivering Value: Designing & Managing Integrated Marketing Channels
 
Marketing channels
Marketing channelsMarketing channels
Marketing channels
 
channel marketing, selection, vertical marketing
channel marketing, selection, vertical marketing channel marketing, selection, vertical marketing
channel marketing, selection, vertical marketing
 
Marketing channels, retailers and wholesalers
Marketing channels, retailers and wholesalersMarketing channels, retailers and wholesalers
Marketing channels, retailers and wholesalers
 
Marketing channel & supply chain management (principles of marketing)
Marketing channel & supply chain management (principles of marketing)Marketing channel & supply chain management (principles of marketing)
Marketing channel & supply chain management (principles of marketing)
 
channels.ppt#distribution#channel#imp notes about management
channels.ppt#distribution#channel#imp notes about managementchannels.ppt#distribution#channel#imp notes about management
channels.ppt#distribution#channel#imp notes about management
 
Delivering value
Delivering valueDelivering value
Delivering value
 
Unit - 3 - PLACE.pdf
Unit - 3 - PLACE.pdfUnit - 3 - PLACE.pdf
Unit - 3 - PLACE.pdf
 
Com. marketing ppt
Com. marketing pptCom. marketing ppt
Com. marketing ppt
 
Com. marketing ppt
Com. marketing pptCom. marketing ppt
Com. marketing ppt
 
Channel Distribution
Channel Distribution Channel Distribution
Channel Distribution
 
MGT FAT.pdf
MGT FAT.pdfMGT FAT.pdf
MGT FAT.pdf
 
Business marketing channels
Business marketing channelsBusiness marketing channels
Business marketing channels
 
Marketing Channels
Marketing ChannelsMarketing Channels
Marketing Channels
 
Business marketing -module_3
Business marketing -module_3Business marketing -module_3
Business marketing -module_3
 
Marketing Channels.pptx
Marketing Channels.pptxMarketing Channels.pptx
Marketing Channels.pptx
 
Mktg 3_07 PPT STUDENTS_1.ppt
Mktg 3_07 PPT STUDENTS_1.pptMktg 3_07 PPT STUDENTS_1.ppt
Mktg 3_07 PPT STUDENTS_1.ppt
 
Mktg%203_07%20PPT%20STUDENTS_1.pptx
Mktg%203_07%20PPT%20STUDENTS_1.pptxMktg%203_07%20PPT%20STUDENTS_1.pptx
Mktg%203_07%20PPT%20STUDENTS_1.pptx
 
CHANNEL MANGEMENT/DISTRIBUTION.ppt
CHANNEL MANGEMENT/DISTRIBUTION.pptCHANNEL MANGEMENT/DISTRIBUTION.ppt
CHANNEL MANGEMENT/DISTRIBUTION.ppt
 

Último

Anyhr.io | Presentation HR&Recruiting agency
Anyhr.io | Presentation HR&Recruiting agencyAnyhr.io | Presentation HR&Recruiting agency
Anyhr.io | Presentation HR&Recruiting agencyHanna Klim
 
MC Heights construction company in Jhang
MC Heights construction company in JhangMC Heights construction company in Jhang
MC Heights construction company in Jhangmcgroupjeya
 
The End of Business as Usual: Rewire the Way You Work to Succeed in the Consu...
The End of Business as Usual: Rewire the Way You Work to Succeed in the Consu...The End of Business as Usual: Rewire the Way You Work to Succeed in the Consu...
The End of Business as Usual: Rewire the Way You Work to Succeed in the Consu...Brian Solis
 
Data skills for Agile Teams- Killing story points
Data skills for Agile Teams- Killing story pointsData skills for Agile Teams- Killing story points
Data skills for Agile Teams- Killing story pointsyasinnathani
 
NewBase 25 March 2024 Energy News issue - 1710 by Khaled Al Awadi_compress...
NewBase  25 March  2024  Energy News issue - 1710 by Khaled Al Awadi_compress...NewBase  25 March  2024  Energy News issue - 1710 by Khaled Al Awadi_compress...
NewBase 25 March 2024 Energy News issue - 1710 by Khaled Al Awadi_compress...Khaled Al Awadi
 
Developing Coaching Skills: Mine, Yours, Ours
Developing Coaching Skills: Mine, Yours, OursDeveloping Coaching Skills: Mine, Yours, Ours
Developing Coaching Skills: Mine, Yours, OursKaiNexus
 
To Create Your Own Wig Online To Create Your Own Wig Online
To Create Your Own Wig Online  To Create Your Own Wig OnlineTo Create Your Own Wig Online  To Create Your Own Wig Online
To Create Your Own Wig Online To Create Your Own Wig Onlinelng ths
 
IIBA® Melbourne - Navigating Business Analysis - Excellence for Career Growth...
IIBA® Melbourne - Navigating Business Analysis - Excellence for Career Growth...IIBA® Melbourne - Navigating Business Analysis - Excellence for Career Growth...
IIBA® Melbourne - Navigating Business Analysis - Excellence for Career Growth...AustraliaChapterIIBA
 
Mihir Menda - Member of Supervisory Board at RMZ
Mihir Menda - Member of Supervisory Board at RMZMihir Menda - Member of Supervisory Board at RMZ
Mihir Menda - Member of Supervisory Board at RMZKanakChauhan5
 
Q2 2024 APCO Geopolitical Radar - The Global Operating Environment for Business
Q2 2024 APCO Geopolitical Radar - The Global Operating Environment for BusinessQ2 2024 APCO Geopolitical Radar - The Global Operating Environment for Business
Q2 2024 APCO Geopolitical Radar - The Global Operating Environment for BusinessAPCO
 
A flour, rice and Suji company in Jhang.
A flour, rice and Suji company in Jhang.A flour, rice and Suji company in Jhang.
A flour, rice and Suji company in Jhang.mcshagufta46
 
PDT 89 - $1.4M - Seed - Plantee Innovations.pdf
PDT 89 - $1.4M - Seed - Plantee Innovations.pdfPDT 89 - $1.4M - Seed - Plantee Innovations.pdf
PDT 89 - $1.4M - Seed - Plantee Innovations.pdfHajeJanKamps
 
MoneyBridge Pitch Deck - Investor Presentation
MoneyBridge Pitch Deck - Investor PresentationMoneyBridge Pitch Deck - Investor Presentation
MoneyBridge Pitch Deck - Investor Presentationbaron83
 
Plano de marketing- inglês em formato ppt
Plano de marketing- inglês  em formato pptPlano de marketing- inglês  em formato ppt
Plano de marketing- inglês em formato pptElizangelaSoaresdaCo
 
Talent Management research intelligence_13 paradigm shifts_20 March 2024.pdf
Talent Management research intelligence_13 paradigm shifts_20 March 2024.pdfTalent Management research intelligence_13 paradigm shifts_20 March 2024.pdf
Talent Management research intelligence_13 paradigm shifts_20 March 2024.pdfCharles Cotter, PhD
 
Introduction to The overview of GAAP LO 1-5.pptx
Introduction to The overview of GAAP LO 1-5.pptxIntroduction to The overview of GAAP LO 1-5.pptx
Introduction to The overview of GAAP LO 1-5.pptxJemalSeid25
 
Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...
Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...
Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...IMARC Group
 
Lecture_6.pptx English speaking easyb to
Lecture_6.pptx English speaking easyb toLecture_6.pptx English speaking easyb to
Lecture_6.pptx English speaking easyb toumarfarooquejamali32
 

Último (20)

Anyhr.io | Presentation HR&Recruiting agency
Anyhr.io | Presentation HR&Recruiting agencyAnyhr.io | Presentation HR&Recruiting agency
Anyhr.io | Presentation HR&Recruiting agency
 
MC Heights construction company in Jhang
MC Heights construction company in JhangMC Heights construction company in Jhang
MC Heights construction company in Jhang
 
WAM Corporate Presentation Mar 25 2024.pdf
WAM Corporate Presentation Mar 25 2024.pdfWAM Corporate Presentation Mar 25 2024.pdf
WAM Corporate Presentation Mar 25 2024.pdf
 
The End of Business as Usual: Rewire the Way You Work to Succeed in the Consu...
The End of Business as Usual: Rewire the Way You Work to Succeed in the Consu...The End of Business as Usual: Rewire the Way You Work to Succeed in the Consu...
The End of Business as Usual: Rewire the Way You Work to Succeed in the Consu...
 
Data skills for Agile Teams- Killing story points
Data skills for Agile Teams- Killing story pointsData skills for Agile Teams- Killing story points
Data skills for Agile Teams- Killing story points
 
NewBase 25 March 2024 Energy News issue - 1710 by Khaled Al Awadi_compress...
NewBase  25 March  2024  Energy News issue - 1710 by Khaled Al Awadi_compress...NewBase  25 March  2024  Energy News issue - 1710 by Khaled Al Awadi_compress...
NewBase 25 March 2024 Energy News issue - 1710 by Khaled Al Awadi_compress...
 
Developing Coaching Skills: Mine, Yours, Ours
Developing Coaching Skills: Mine, Yours, OursDeveloping Coaching Skills: Mine, Yours, Ours
Developing Coaching Skills: Mine, Yours, Ours
 
To Create Your Own Wig Online To Create Your Own Wig Online
To Create Your Own Wig Online  To Create Your Own Wig OnlineTo Create Your Own Wig Online  To Create Your Own Wig Online
To Create Your Own Wig Online To Create Your Own Wig Online
 
IIBA® Melbourne - Navigating Business Analysis - Excellence for Career Growth...
IIBA® Melbourne - Navigating Business Analysis - Excellence for Career Growth...IIBA® Melbourne - Navigating Business Analysis - Excellence for Career Growth...
IIBA® Melbourne - Navigating Business Analysis - Excellence for Career Growth...
 
Mihir Menda - Member of Supervisory Board at RMZ
Mihir Menda - Member of Supervisory Board at RMZMihir Menda - Member of Supervisory Board at RMZ
Mihir Menda - Member of Supervisory Board at RMZ
 
Q2 2024 APCO Geopolitical Radar - The Global Operating Environment for Business
Q2 2024 APCO Geopolitical Radar - The Global Operating Environment for BusinessQ2 2024 APCO Geopolitical Radar - The Global Operating Environment for Business
Q2 2024 APCO Geopolitical Radar - The Global Operating Environment for Business
 
A flour, rice and Suji company in Jhang.
A flour, rice and Suji company in Jhang.A flour, rice and Suji company in Jhang.
A flour, rice and Suji company in Jhang.
 
PDT 89 - $1.4M - Seed - Plantee Innovations.pdf
PDT 89 - $1.4M - Seed - Plantee Innovations.pdfPDT 89 - $1.4M - Seed - Plantee Innovations.pdf
PDT 89 - $1.4M - Seed - Plantee Innovations.pdf
 
MoneyBridge Pitch Deck - Investor Presentation
MoneyBridge Pitch Deck - Investor PresentationMoneyBridge Pitch Deck - Investor Presentation
MoneyBridge Pitch Deck - Investor Presentation
 
Plano de marketing- inglês em formato ppt
Plano de marketing- inglês  em formato pptPlano de marketing- inglês  em formato ppt
Plano de marketing- inglês em formato ppt
 
Investment Opportunity for Thailand's Automotive & EV Industries
Investment Opportunity for Thailand's Automotive & EV IndustriesInvestment Opportunity for Thailand's Automotive & EV Industries
Investment Opportunity for Thailand's Automotive & EV Industries
 
Talent Management research intelligence_13 paradigm shifts_20 March 2024.pdf
Talent Management research intelligence_13 paradigm shifts_20 March 2024.pdfTalent Management research intelligence_13 paradigm shifts_20 March 2024.pdf
Talent Management research intelligence_13 paradigm shifts_20 March 2024.pdf
 
Introduction to The overview of GAAP LO 1-5.pptx
Introduction to The overview of GAAP LO 1-5.pptxIntroduction to The overview of GAAP LO 1-5.pptx
Introduction to The overview of GAAP LO 1-5.pptx
 
Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...
Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...
Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...
 
Lecture_6.pptx English speaking easyb to
Lecture_6.pptx English speaking easyb toLecture_6.pptx English speaking easyb to
Lecture_6.pptx English speaking easyb to
 

Designing and managing integrated marketing channels

  • 1. Designing and Managing Integrated Marketing Channels Presented By:- Pranjal Mathur
  • 2. Marketing channels and Value networks • Chief role is to convert potential buyers to profitable customers. • Firm’s pricing depends on selection of marketing channels. • Choice of channel depends on marketing strategy with respect to segmentation, targeting and positioning.
  • 3. Marketing Strategy Push Pull Strategy Strategy
  • 4. Push Strategy • Push strategy:- Producers induce intermediaries to carry, promote and sell products and services to end users through its sales force, trade promotions and other means. • Appropriate when:- 1. Brand loyalty is high. 2. Brand selection at the spot. 3. Product is an impulse item. 4. Product benefits are well understood.
  • 5. Pull Strategy • Pull strategy:- Customers are persuaded through promotional and advertising campaigns to demand the product, which induces intermediaries to order it from producer. • Appropriate when:- 1. Brand loyalty is high. 2. High involvement product. 3. Brand distinction is possible. 4. Brand selection prior to purchase.
  • 6. Channel Development • Deciding best channel is not a problem but convincing the available intermediaries to handle firm’s product is a difficult task. • Smaller markets – directly through retailers. • Larger markets – through distributors. • Rural markets – through local merchants. • Channel system evolves as a function of - 1. Local opportunities. 2. Emerging threats. 3. company’s resources and capabilities.
  • 7. Hybrid Channels / “Go-to Markets” • Example to understand:- HP uses:- 1. Sales force – large accounts. 2. Outbound telemarketing – medium size accounts. 3. Direct mail – small accounts. 4. Retailers – still smaller accounts. 5. Internet – specialty item orders.
  • 8. • To mange hybrid channels, company must make sure that these channels:- 1. Work well together. 2. Match each target customer’s preferred way of doing business. • Features expected by customers in a hybrid channel:- 1. Ability to order online and pick it up from a convenient retail store. 2. ability to return the ordered product back to a nearby retail store. 3. Right to discounts and promotional offers.
  • 9. Understanding Customer’s Needs • Factors based on which customers chooses a particular channel are :- 1. Price. 2. Product assortment. 3. Convenience. 4. Own shopping goals like economic, social and experimental.
  • 10. • According to Nunes and Cespades customers fall into four categories :- 1. Habitual shoppers:- purchase from same place in same manner over time. 2. High value deal seekers:- buyers who know their needs and survey to a great deal to buy at lowest possible price. 3. Variety loving shoppers:- gathers info from many channels and buy from favorable channels regardless of price. 4. High involvement buyers:- gathers info from all possible channels, buy from low cost channels and take advantage of customer support from high-touch channel.
  • 11. Value Networks • Demand-chain planning:- when a firm first thinks of market and then design supply chain backwards from market to firm. • Value networks is a system of partnerships and alliances that a firm creates to source, augment and deliver its offerings to the end user. • A value network includes:- 1. Firm’s suppliers. 2. Its supplier’s supplier. 3. Its intermediate customers. 4. End customers.
  • 12. • Various insights of demand-chain planning:- 1. Company can determine whether more money is upstream or downstream this will help in integrating backward or forward. 2. Company is more aware of disturbances anywhere in supply chain that might cause costs, price or supplies to change suddenly. 3. Companies can go online with their business partners to carry on faster and more accurate communications, transactions and payments to reduce costs and speed up information and increase accuracy.
  • 13. • Managing value networks requires investment in IT(Information and Technology) and soft wares. • SAP and Oracle ERP systems to manage cash flows, manufacturing, human resources, purchasing and other functions within a unified framework.
  • 14. Roles of Marketing Channels • Producer gain effectiveness and efficiency by using intermediaries through:- 1. Contacts. 2. Experience. 3. Scale of operation. 4. Specialization. • Make available goods and services widely available to target market.
  • 15. Channel Function and Flows • Functions that are performed by channel members are:- 1. Gathers information about potential and current customers and competitors. 2. Develop and disseminate persuasive information to stimulate purchasing. 3. Place orders with manufacturers. 4. Reach agreements on price and other terms so that transfer of ownership or possession can be affected. 5. Assume risk connected with channel work. 6. Provide for storage and movement of goods. 7. Provide for buyer’s payment of their bills through banks and other financial institutions.
  • 16. • Physical product transfer, title and promotional processes constitute a forward flow of activity from company to customers. • Ordering and payment processes constitute a backward flow of activity from customers to company. • Information, negotiation, finance and risk taking processes take place in both the directions. • A manufacturer selling a physical product or service might require only three channels:- 1. Sales channel. 2. Distribution channel. 3. Service channel.
  • 17. • All channel functions have three things in common:- 1. They use up scarce resources. 2. They can be performed better through specialization. 3. They can be shifted among channel members. • If intermediaries are more efficient than manufacturers, prices to customers should be lower. • If consumer’s perform some work by themselves they can enjoy even lower prices.
  • 18. Channel Levels • The producers and final customers are part of every channel. • A zero level channel consists of a manufacturer selling directly to final customers.(Tupperware, Bata, BPCL) • The one level channel contains one selling intermediary such as retailer. • Two level channel contains two intermediaries such as wholesalers and retailers. • Three level channel contains three intermediaries such as distributors, wholesalers and retailers.
  • 19. • Channel normally describe a forward movement of products from source to user. • But there are reverse flow channels which are important in following cases:- 1. Reuse of products or containers (cold drink bottles). 2. Recycle of products (paper). 3. Disposal of products and packaging.
  • 20. Channel-Design Decisions • Designing a marketing channel requires:- 1. Analyzing customer needs. 2. Establishing channel objectives. 3. Evaluating major channel alternatives.
  • 21. 1. Analyzing Customer Needs • Channels produce five service outputs:- 1. Lot Size:- the number of units the channel permits a typical customer to purchase on one occasion. 2. Waiting and Delivery Time:- the average time customers wait for receipt of goods. 3. Spatial Convenience:- Bata and Exide batteries have made it easier for consumers to access them. 4. Product Variety:- assortment breadth provided by marketing channels. 5. Service Backup:- the add-on services (credit, delivery installation, repairs) provided by channel .
  • 22. 2.Establishing Objectives and Constraints • Marketers should state their channel objectives in term of targeted service output levels. • Channel institutions should arrange their functional tasks to minimize total channel costs and still provides desired level of service outputs. • Channel objectives vary with product characteristics :- 1. Perishable products - direct marketing. 2. Bulky products - channels that minimize shipping distance and amount of handling. 3. Custom built machinery - company sales representatives. 4. Products requiring installations and regular check ups – company owned or leased franchisees.
  • 23. 3. Identifying and Evaluating major Channel Alternatives • A firm can choose from a wide variety channels for reaching customers:- 1. Sales force – complex product and transactions. 2. Internet – less expensive but not effective with complex products. 3. Distributors – can create sales but contact with customers is lost. 4. Manufacturer representatives – reach to different segment of customers and delivers the right product at low cost. If fails then leads to channel conflicts and excessive costs.
  • 24. Number of Intermediaries • A firm can decide on number of intermediaries to use at each level by using these three strategies :- 1. Exclusive distribution. 2. Selective distribution. 3. Intensive distribution.
  • 25. Exclusive Distribution • Appropriate when manufacturer wants to maintain a strict control over service level and outputs offered by resellers. • Requires a closer partnership with intermediaries. • Used in distribution of automobiles, earth movers etc. • Example:- Gucci
  • 26. Selective Distribution • Relies on more than a few but less than all of intermediaries. • A company can gain adequate market coverage with less cost and more control.
  • 27. Intensive Distribution • Goods and services are kept in as many stores as possible. • These strategies are generally used for perishable products such as snacks, soft- drinks, newspapers etc. • Intensive distribution increases product availability and service but encourages retailers to compete aggressively. • Ex. :- Titan watches.
  • 28. Terms and Responsibilities of Channel Members • Each channel member must be treated respectfully and must be given opportunity to be profitable. • Main policies are:- 1. Price policies. 2. Condition of scales. 3. Territorial rights. 4. Mutual services and responsibilities.
  • 29. • Price policies:- A producer should establish a price-list and schedule of discounts and allowances. • Conditions of sales:- Refers to payment terms and producer guarantees. Provision for trade discounts on bulk orders or purchases. Guarantee against defective merchandise or price declines. • Distributor’s territorial rights:- Definition of distributor's territories and terms under which distributor will enfranchise with other distributors.
  • 30. • Mutual services and responsibilities:- Example of McDonald’s – McDonald’s provides:- 1. Franchisee with a building. 2. Promotional support. 3. Record keeping system. 4. Training. 5. General administrative and technical assistance.
  • 31. • In return franchisees are expected to :- 1. Satisfy company standards. 2. Cooperate with promotional offers. 3. Furnish required information and buy supplies from specified suppliers or vendors.
  • 32. Channel-Management Decisions • After a channel has been chosen, company must :- 1. Select. 2. Train. 3. Motivate. individual intermediaries for each channel.
  • 33. 1. 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.
  • 34. 2. Training and Motivating Channel Members • A company should view its intermediaries as end-users. • Needs and wants of intermediaries are compulsory to stimulate them to top-level performance. • For ex.:- Microsoft. • Channel power:- ability to alter behavior of intermediaries so that they can think out-of- box.
  • 35. • Powers a manufacturer posses to elicit cooperation from intermediaries:- 1. Coercive power:- threatening intermediaries to terminate relationship if they fail to cooperate. 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.
  • 36. • Efficient Consumer Response (ECR) opted by manufacturer and intermediaries to streamline supply chain and cut costs. • ECR organizes relationship between manufacturer and intermediaries in two areas:- 1. Demand side management:- collaborative activities to stimulate demand from consumer side by promoting joint marketing and sales activities. 2. Supply side management:- collaborative practices to optimize supply.
  • 37. 3. Evaluating Channel Members • Manufacturers regularly check performance against standards such as:- sales quotas, inventory levels, customer delivery time, treatment of damaged and lost goods and cooperation in promotional and training programs.
  • 38. Modifying Channel Design • A channel is modified when:- 1. Channel is not working well as planned. 2. Consumer buying pattern change. 3. Market expands. 4. New competition arises. 5. Product moves into latter stage of its product life cycle.
  • 39. Channel Integration System Marketing Systems Horizontal Vertical Marketing Marketing Systems Systems
  • 40. Horizontal Marketing System • A horizontal marketing system is one in which two or more unrelated companies put together resources or programs to exploit an emerging market opportunity. • Each one lacks capital, know how production, marketing resources to venture alone. • Companies might work with each other on temporary or permanent basis.
  • 41. Vertical Marketing System • The producer, wholesaler and retailer acts a unified system. • One channel member, the channel captain owns the others or franchises them has so much power that they all cooperate. • VMS arose as a result of strong channel members’ attempt to control behavior and eliminate the conflict.
  • 42. Vertical Marketing System Administered Contractual Corporate Vertical Vertical Marketing Vertical Marketing Marketing System System System
  • 43. • Corporate Vertical Marketing System:- It combines successive stages of production and distribution under single ownership. • Administered Vertical Marketing System:- It coordinates successive stages of production and distribution through size and power of one of the members. • Contractual Vertical Marketing System:- It consists of independent firms at different levels of production and distribution, in order to obtain more economies or sales impact what they had achieved alone.
  • 44. Contractual Vertical Marketing Systems Wholesalers Retailer Franchisee Sponsored Cooperatives Organizations Voluntary Chain
  • 45. • Wholesalers Sponsored Voluntary Chain:- Wholesalers organize voluntary chains of retailers to help them standardize their selling practices and help them achieve buying economies in order to compete with large chain organizations. • Retailer Cooperatives:- Retailers take the initiative and organize new business entity to carry on wholesaling with some production. Members concentrate their purchases through retailer co- op and plan their advertising jointly. Profits pass back to members in proportion to their purchase. • Franchisee Organization:- A channel member called franchisor might link several successive stage in the production-distribution process.
  • 46. Conflict, Cooperation and Competition • Channel conflict is generated when one channel members’ action prevent another channel from achieving its goals. • Channel coordination occurs when channel members are brought together to advance goals of the channel as opposed to their own potentially incompatible goals.
  • 47. Types of Conflict Conflict Causes of Conflict Managing Conflicts
  • 48. Causes of Channel Conflict • Conflicts may arise from:- 1. Goal incompatibility :- Manufacturers want to achieve rapid market penetration through low price policy. 2. Unclear Roles and Rights :- HP may sell personal computers to large accounts through its own sales force, but its licensed dealers may also be trying to sell to large accounts.
  • 49. 3. Differences in Perception:- Disputes between manufacturers and distributors about optimal advertising strategy. 4. Intermediaries Dependence on Manufacturer :- Fortune of exclusive dealers depend totally upon manufacturers’ products and pricing decisions which creates high potential for conflict.
  • 50. Managing Channel Conflict • Various mechanisms of managing conflicts are:- 1. Adoption of Superordinate Goal:- Channel members come to an agreement on fundamental goals they are jointly seeking, weather it is survival, market share, high quality or customer satisfaction. 2. Exchange of Employees
  • 51. 3. Joint Membership in Trade Association:- The manufacturer and the intermediaries come together in good cooperation which may lead to better understanding between them. 4. Co-option:- It is an effort by one organization to win the support of leaders of other organization by including them in advisory council, board of directors, which reduces the chances of conflicts. 5. Diplomacy, Mediation or Arbitration:- when conflict is chronic, the companies may need to resort to diplomacy, mediation or arbitration.
  • 52. i. Diplomacy:- It takes place when each sends a person or groups to meet with its counterparts to resolve the conflict. ii. Mediation:- It means resorting to a neutral third party skilled in conciliating the two parties interest. iii. Arbitration:- It occurs when both the parties agree to present their arguments to one or more arbitrators and accept their decisions. 6. Legal Recourse:- when none of the above methods prove effective, company or channel partners may choose to file a law suit.