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MARKETING MANAGEMENT12th edition
15 Designing and
ManagingValue Networks and
Channels
Kotler Keller
15-2
Chapter 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
and manage channel conflict?• What is the future for e-commerce?
15-3
Marketing Channels
Sets of interdependent organizationsinvolved in the process of making a product or service available for use
or consumption.
15-4
Channels and Marketing Decisions
Push
Strategy
Pull
Strategy
15-5
Categories of Buyers
Habitual shoppers
High value deal seekers
Variety-loving shoppers
High-involvement shoppers
15-6
Buyer Expectations for Channel 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
15-7
Should the 4 P’s be replaced?
• Solutions
• Information
• Value
• Access
15-8
Figure 15.1 Increasing Efficiency
15-9
Channel Member Functions
• Gather information• Develop and disseminate persuasive
communications• Reach agreements on price and terms• Acquire funds to finance inventories• Assume risks• Provide for storage• Provide for buyers’ payment of their bills• Oversee actual transfer of ownership
15-10
Figure 15.2 Marketing Channel Flows
15-11
Figure 15.3 Consumer Marketing Channels
15-12
Figure 15.3 Industrial Marketing Channels
15-13
Designing a Marketing Channel System
Analyze customer needs
Evaluate major channel alternatives
Identify major channel alternatives
Establish channel objectives
15-14
Channel Service Outputs
Lot size
Waiting/delivery time
Spatial convenience
Product variety
Service backup
15-15
Identifying Channel Alternatives
Types of
intermediaries
Number of
intermediaries
Terms and
responsibilities
15-16
Number of Intermediaries
Exclusive
Selective
Intensive
15-17
Figure 15.4 The Value-Adds Versus Costs of Different Channels
15-18
Figure 15.5 Break-Even Chart for the Choice Between A Company Sales Force and Manufacturer’s Sales Agency
15-19
Channel-Management Decisions
Selecting channel members
Training channel members
Motivating channel members
Evaluating channel members
Modifying channel members
15-20
Channel Power
• Coercive
• Reward
• Legitimate
• Expert
• Referent
15-21
Channel Integration and Systems
Vertical marketing systems
• Corporate VMS• Administered VMS• Contractual VMSHorizontal marketing
systemsMultichannel systems
15-22
Figure 15.6 The Hybrid Grid
15-23
Managing Channel Conflict
• Adoption of superordinate goals
• Cooptation• Diplomacy• Mediation• Arbitration
15-24
e-Commerce Marketing Practices
• Pure-click• Brick-and-click• Brick-and-mortar
15-25
Marketing Debate
Does it matter where you are sold?
Take a position:1. Channel images do not really affectthe brand images of the products theythey sell that much.2. Channel images must be consistent withthe brand image.
15-26
Marketing Discussion
Think of your favorite retailers. How have they integrated their
channel system? How would youlike their channels to be integrated?
Do you use multiple channelsfrom them? Why?