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Channel strategy
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Marketing 624Channels of Distribution ManagementMarketing Channel StrategyDr. Bert Rosenbloom Professor of Marketing andRauth Chair in Electronic Marketing
Channel StrategyThe broad principles by which the firm expects to achieve its distribution objectives for its target market(s)
What role should distribution play in the firms overall objectives and strategies?
What role should distribution play in the marketing mix?
How should the firms marketing channels be designed to achieve its distribution objectives?
Six Fundamental Strategic Distribution Decisions
What kinds of channel members should be selected to meet the firms distribution objectives?
How can the marketing channel be managed to implement the firms channel design effectively and efficiently?
How can channel member performance be evaluated?
Six Fundamental Strategic Distribution Decisions (Contd)
Channel DesignThose decisions involving the development of new marketing channels where none had existed before, or the modification of existing channels
The design of the channel should contribute to the firms quest for Differential AdvantageChannel Design and Differential Advantage
Recognize need for channel design decisionSet and coordinate distribution objectivesSpecify distribution tasksDevelop possible alternative channel structuresEvaluate variables affecting channel structureChoose the best channel structureSelect the channel membersParadigm of the Channel Design Decision
Obvious examples pp. 200-201 in text But many times the need to make channel design decisions is not obviousChannel Design DecisionPhase 1: Recognize Need for Channel Design Decision
Channel Design Decision Phase 2:Set & Coordinate Distribution Objectives Become familiar with objectives of firm Set explicit distribution objectives Check for congruency
Channel Design Decision Phase 3:Specifying Distribution TasksDont underestimate all of the nuts and bolts necessary to make products and services conveniently available to customers
Channel Design Decision Phase 4:Develop Alternative Channel Structures Number of levels Intensity at various levels Types of intermediaries
Channel Design Decision Phase 5:Evaluate Variables Affecting channel Structure Market variables Product variables Company variables Intermediary variables Environmental variables Behavioral variables Heuristics play an important role
Channel Design Decision Phase 6:Choosing the Best Channel Structure Product-based models (Aspinwall) Financial Approach Transaction Cost Analysis Approach Management Science Approach Judgmental Heuristic Approach
Channel Design Decision Phase 7:Select the Channel Members Finding perspective channel members Applying selection criteria Securing perspective channel members
Work backwards from what the final customers wants. A bottom up approach.Target Markets and Channel Design Strategy
Market geography Market size Market density Market behavior when customers buy where customers buy how customers buy who buys
Framework for Market Analysis
Who Buys? Who makes physical purchase? Who uses the product? Who influences the buying decision?
Channel ManagementThe administration of existing channels to secure the cooperation of channel members in achieving the firms distribution objectives
Find out needs and problems Offer support consistent with channel member needs Provide leadershipMotivating Channel Members
Grapevine (informal communications network) Inside research Outside research Marketing channel audit Distributor advisory councilsLearning About Channel Members Needs and Problems
Cooperative approach Partnership approach Distribution programming approachSupport for Channel Members
New Product Planning and DevelopmentProduct Life CycleStrategic Product ManagementProduct Issues in Channel Management
Channel member input Acceptability Fit with channel member assortments Education and training Problems?New Product Planning and Development
Introduction Growth Maturity Saturation Absolute decline Product Life CycleWhat are the channel management implications during each stage?
Product differentiationProduct positioningProduct line expansion and contractionTrading up and trading downBrand strategyService strategyStrategic Product Management
Cost Market Competition ChannelsPricing in Channel Management
Pull versus Push Promotional StrategyVs.Promotion Through the Channel
Cooperative advertising Promotional allowances Displays and selling aids In-store promotions Contests and incentives Special promotional deals and merchandise campaignsClassic Push Promotional Strategies
Training Quotas Missionary selling Trade showsKinder and Gentler Push Promotional Strategies