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8/8/2019 11.Distribution Strategy
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MARKETING STRATEGY
11. Designing and managing
Integrated Marketing Channels
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CH APTER QUESTIONS
´ What is a marketing channel system and value
network?
´ What work do marketing channels perform?
´ How should channels be designed?
´ What decisions do companies face in managing their
channels?
´ How should companies integrate channels andmanage channel conflict?
´ What are the key issues with e-commerce?
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WH AT IS A MARKETING CH ANNEL?
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.
Marketing channels must not just markets, they mustalso markets
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BUYER EXPECTATIONS FOR
CH ANNEL INTEGRATION
´ Ability to order a product online and pick it up at a
convenient retail location
´ Ability to return an online-ordered product to a nearby
store
´ Right to receive discounts based on total online and
offline purchases
EX: HARLEY DAVIDSON
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C ATEGORIES OF BUYERS
´
Habitual shoppers: purchase from the sameplaces in the same manner over time´ High value deal seekers: know their needs and
channel surf a great deal before buying at thelowest possible price
´
Variety-loving shoppers: gather information inmany channels and take advantage of high touchservices ,and then buy in their favorite channel,regardless of price
´ High-involvement shoppers: gather information inall channels make their purchase in a low costchannel, but take advantage of customer supportfrom a high touch channel
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TYPES OF SHOPPERS
´ Service/quality customers
´ Price/value customers
´ Affinity customers-a tight bond between
customers and company ,when affinity is
high cost of new product launch goes down
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SHOULD THE 4 P¶S BE
REPLACED?
´ Solutions
´ Information
´ Value
´ Access
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INCREASING EFFICIENCY
DIRECT MARKETING
REDUCE THE NUMBER OF CONTACTS AND THE WORK
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CH ANNEL MEMBER
FUNCTIONS
´ Gather information
´ Develop and disseminate persuasive communications
´ Reach agreements on price and terms
´ Assume risks
´ Provide for storage
´ Provide for buyers· payment of their bills
´ Oversee actual transfer of ownership
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FIGURE MARKETING CH ANNEL FLOWS
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FIGURE
CONSUMER MARKETING
CH ANNELS
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FIGURE INDUSTRIAL
MARKETING CH ANNELS
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DESIGNING A
MARKETING CH ANNEL SYSTEM
´ Analyze customer needs
´ Establish channel objectives
´ Identify major channel alternatives´ Evaluate major channel alternatives
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CH ANNEL SERVICE OUTPUTS
´ Lot size: the number of units the channel permits atypical customer to purchase on one occasion
´ Waiting/delivery time: customers prefer fasterdelivery channels
´ Spatial convenience: customers prefer convenience-BATA retail outlet
´ Product variety: customers prefer greater assortmentbecause more choices increase the chance of
finding their need´ Service backup: the add on services like ²
credit,delivery,installation,repairs provided by thechannel
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IDENTIFYING CH ANNEL ALTERNATIVES
´ Types of intermediaries-SHGs,-OPERATION
SHAKTI,e-choupal
´
Number of intermediaries´ Terms and responsibilities
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NUMBER OF INTERMEDIARIES
´ Exclusive-more dedicating and knowledgeableselling Involves limiting distribution to a singleoutlet. The product is usually highly priced, andrequires the intermediary to place much detail in itssell. An example of would be the sale of vehicles
through exclusive dealers.
´ Selective-limited number of outlets orintermediaries ²DISNEY ²videos through rental
store,online,catalogs ,TITANW
ATCHES
´ Intensive-PLACING the goods in as many outlets aspossible- tobacco products, snack foods,soap
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FIGURE 15.4 THE VALUE-ADDS VERSUS COSTS OF
DIFFERENT CH ANNELS
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FIGURE BREAK-EVEN CH ART FOR THE CHOICE BETWEEN A
COMPANY SALES FORCE AND MANUFACTURER¶S SALES AGENCY
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TERMS AND RESPONSIBILITIES
OF CH ANNEL MEMBERS
´ Price policy-price lists, schedule of
discounts for intermediaries
´ Condition of sale-payment terms andproducer guarantees
´ Distributors· territorial rights
´Mutual services and responsibilities-McDonald's franchisees
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CH ANNEL-MANAGEMENT DECISIONS
´ Selecting channel members
´ Training channel members
´ Motivating channel members
´ Evaluating channel members
´ Modifying channel members
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MOTIVATING-CH ANNEL POWER
´ Coercive-manufacturer threaten to withdrawrelationship if intermediaries fail to co-operate
´ Reward-manufacturer offer intermediate an extrabenefit for performing specific acts butintermediaries may ask for reward every time for
certain behavior´ Legitimate-manufacturer requests a behavior that is
warranted under the contract
´ Expert-the manufacturer has special knowledgethat the intermediaries value but if this expertisepassed to intermediaries then power weakens
´ Referent-intermediaries are proud to be associatedwith manufacturer ²IBM,CATERPILLAR
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CH ANNEL INTEGRATION AND SYSTEMS
Vertical marketing systems
´ Corporate VMS-UNDER a single ownership-BPCL
´ Administered VMS-co-ordinates successive stages of production and distribution through the size and power of one of the members-P&G
´ Contractual VMS-wholesaler sponsored voluntary chains,retailer co-operatives, franchise organizations
Horizontal marketing systems-two or more unrelatedcompanies put together resources to exploit an emerging marketing opportunity-HLL with Pepsi for Lipton's ready to
drink and other beverages Multichannel systems-when a single firm uses 2 or more
marketing channels to reach one or more customersegments
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FIGURE 15.6 THE HYBRID GRID
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WH AT IS CH ANNEL
CONFLICT?
´
Channel conflict occurs when one member·s actionsprevent another channel from achieving its goal.
´ Types of channel conflict
« Vertical-conflict between different levels within the samechannels ²PETROLEUM COMPANIES on commission
« Horizontal-members with in the same level within thechannel-dealers in operation of area conflict
« Multichannel -two or more channels that sell to the samemarket-ESCORTS trying to create parallel dealership for a
line of tractors in the early 1980s
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C AUSES OF CH ANNEL CONFLICT
´ Goal incompatibility-manufacturer and dealeron profits
´ Unclear roles and rights-manufacturer salesforce and dealer·s sales force servicing same
territory-HP-personal computers
´ Differences in perception-manufacturer may beoptimistic about the short term economicoutlook and wants dealers to carry high
inventory´ Intermediaries· dependence on manufacturer-
AUTO dealers on pricing
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TABLE STRATEGIES FOR MANAGING
CH ANNEL CONFLICT
´ Adoption of super ordinategoals-joint goals of members
´ Exchange of employees-GM·sdealer policy
´ Cooptation-support of otherorganization·s leaders as a board of directors
´ Diplomacy-to meet the counter partto resolve the conflicts
´ Mediation-by neutral 3rd party
´ Arbitration-to arbitrators- It is asettlement technique in which athird party reviews the case andimposes a decision that is legally
binding for both sides´ Legal recourse
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Marketing mix in E-MARKETING
PRODUCT: LIMITED LIFE OF THE PRODUCT
PRICE: CONSTANT INNOVATION IN PRODUCTS,ONLINE
SAVES COST,TIME
PLACE: SAFE DELIVERY OF GOODS ,GLOBALISATION
PROMOTION: DIRECT INTERACTION BETWEEN
CONSUMERS AND SELLERS:
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brick and mortar
businesses are
companies which have
a physical presence
(for example, a building
made of bricks andmortar) ³ which offer
face-to-face consumer
experiences.
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Bricks-and-clicks is a business model by which a
company integrates both offline (bricks) and online(clicks) presences. It is also known as click-and-mortar
or clicks-and-bricks, as well as bricks, clicks and flips,
flips referring to catalogs.
For example, an electronics store may allow the user toorder online, but pick up their order immediately at a
local store, which the user finds using locator software.
Conversely, a furniture store may have displays at a
local store from which a customer can order an item
electronically for delivery.
BRICKS AND CLICKS FIRMS
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1.Ranbaxy
2.Nokia
3.Samsung
4.LG
5.Imax
6.Indian railways
7.Airlines ²kingfisher,JET,INDIGO
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CLICK ONLY FIRMS
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B2B E-COMMERCE
´ SUPPLIERWEBSITES
´ Infomediaries-information about alternatives
´ Market makers-third parties create market by
linking buyers and sellers
´ Customer communities-websites where
buyers can swap stories about suppliers
products and services