session 11 - mabd
Post on 04-Apr-2018
223 Views
Preview:
TRANSCRIPT
-
7/30/2019 Session 11 - MABD
1/22
12/16/2012 1
Distribution and Value Networks
-
7/30/2019 Session 11 - MABD
2/22
12/16/2012 2
Marketing Channels
Marketing channel is a set of interdependent organizations
involved in the process of making a product or service
available for use or consumption.
These interdependent organizations, also called as
intermediaries. These are of two types:
Merchants, such as wholesalers and retailers who buy, take
title to and resell the goods.
Brokers, such as sales agents who represent themanufacturers and search for the customers, negotiate on the
producers behalf but do not take title of the goods.
-
7/30/2019 Session 11 - MABD
3/22
12/16/2012 3
Marketing Channels
Convert potential buyers into profitable orders
Marketing Channels serve companys markets
Marketing Channels create markets
The Importance of Channels
-
7/30/2019 Session 11 - MABD
4/22
12/16/2012 4
Value Networks
Value Networks
A system of partnerships and alliances thata firm creates to source, augment, anddeliver its offerings.
-
7/30/2019 Session 11 - MABD
5/22
12/16/2012 5
The Role of Marketing Channels
Producers often delegate the job of selling and distribution to
intermediaries even at the risk of loosing some control over
how and to whom the products are sold. The following are the
reasons for doing so:
Lack of Financial Resources to set up own distributionchannels
More return on investment from the core competency
business.
Not feasible to set up retail channels for just one product line.
Intermediaries achieve superior efficiency in making goods
widely available and accessible to target markets throughtheir contacts, experience, specialization and scale of
operation.
-
7/30/2019 Session 11 - MABD
6/22
12/16/2012 6
The Role of Marketing Channels
Channel LevelsA zero level channel consist of a manufacturer selling directlyto the final customer. Major examples are door to door sale,mail order.
A one-level channel contains one selling intermediary, a two-
level channel contains two selling intermediaries. Theseintermediates could be retailers, distributors.
As the no. of levels increase the level of difficulty ofinformation sharing and coordination also increase. Channelsnormally describe a forward movement of products fromsource to user.
Service Sector Channels
Marketing channels are not limited to distribution of physicalgoods. Producers of services and ideas also needintermediaries to make their services available to targetpopulations. Travel agents, internet, telecalling setups providesuch distribution of services and ideas.
-
7/30/2019 Session 11 - MABD
7/22
12/16/2012 7
The Role of Marketing Channels
-
7/30/2019 Session 11 - MABD
8/22
12/16/2012 8
Channel Design Decisions
Designing a marketing channel will be influenced
by the following factors:
Analyzing Customer Needs
Establishing Objectives and Constraints
Identifying Major Channel Alternatives
Evaluating Major Channel Alternatives
-
7/30/2019 Session 11 - MABD
9/22
12/16/2012 9
Channel Design Decisions
Analyzing Customers Desired Service Output Levels
Channels produce five service outputs, which are as follows:
Lot size The number of units that a customer can purchase from a
channel on one occasion.
Waiting and Delivery time The average time that the customers wait
for the receipt of goods. Customers prefer faster and faster delivery
channels.
Special convenience The degree to which the marketing channel
makes it easier for the customer to buy that product.
Product variety The assortment breadth provided by the marketing
channel.
Service backup The add on services such as credit, delivery,
installation, repairs etc provided by the channel.
-
7/30/2019 Session 11 - MABD
10/22
12/16/2012 10
Channel Design Decisions
Establishing Objectives and Constraints
Channel objectives should be stated in terms of targetedservice output level. Channel objectives vary with productcharacteristics.
Bulky products such as building material require channelsthat minimize the shipping distance and the amount ofhandling.
Perishable products require more direct marketing.
Non standard products such as custom-built machinery aresold by the company representatives directly.
-
7/30/2019 Session 11 - MABD
11/22
12/16/2012 11
Channel Design Decisions
Identifying Major Channel Alternatives
Companies can choose from a wide variety of channels for reaching customers -from sales forces to agents, distributors, dealers and direct mail.
A Channel alternative is described by 3 elements:
Types of IntermediariesCompanies need to look at the intermediaries abilities to use them for distributingtheir products which could range from simple products to highly complicatedtechnical products.
Number of IntermediariesCompanies have to decide on the number of intermediaries to use at dependingupon the distribution strategy. There are three stages are available:
Exclusive distribution means severely limiting the number of intermediaries to
exercise control over the service level and outputs. Selective distribution involves the use of more than a few but less than all of the
intermediaries who are willing to carry a particular of product. This is done to gainmarket coverage with more control and lesser cost.
Intensive distribution consists of the manufacturer placing the goods or services inas many outlets as possible. Generally done for tobacco products, confectionaryand calling cards.
-
7/30/2019 Session 11 - MABD
12/22
12/16/2012 12
Channel Design Decisions
Terms and Responsibilities of Channel Members
The producer must determine the rights and responsibilities ofparticipating channel members. The main elements in the traderelations mix are as follows:
Price policy calls for the producer to establish a price list and schedule
of discounts and allowances that intermediaries see as a equitable andsufficient.
Condition of sale refers to payment terms and producer guarantees.
Distributors territorial rights define the distributors territory and theterms under which the producer will grant franchise to other
distributors.
Mutual service and responsibilities must be carefully spelled out,especially in franchise and exclusive agency channels.
-
7/30/2019 Session 11 - MABD
13/22
12/16/2012 13
Channel Design Decisions
Evaluating the Major Alternatives
Each channel alternative must be evaluated against economic andcontrol & adaptive criteria.
Economic Criteria Each channel produces different level of sales
and costs. Generally agencies produce low cost sales at lowervolumes and higher cost sales for higher volumes due to commissionslinked to sales. On the other hand, sales force of a company has ahigh component of fixed costs and is only viable for higher volumeselling.
Control and Adaptive Criteria A sales agency is anindependent firm seeking to maximize its profits. Agents may
concentrate on the customers who buy the most, not necessarily thosewho buy the manufacturers product. Further agents might not masterthe technical details of the companys product or handle its promotionmaterial effectively.
Sales
Agency
Sales Force
-
7/30/2019 Session 11 - MABD
14/22
12/16/2012 14
Channel Management Decisions
Selecting Channel Members
Training Channel Members
Motivating Channel Members
Evaluating Channel Members
Modifying Channel Members
-
7/30/2019 Session 11 - MABD
15/22
12/16/2012 15
Channel Management Decisions
Selecting Channel MembersCompanies need to select their channel members carefully as they represent thecompany to the customer. To facilitate channel members selection, producesshould determine what characteristics distinguish the better intermediaries, for e.g.the no. of years in business, the growth and profit record and financial strength
Training Channel MembersCompanies need to plan and implement careful training programs for theirintermediaries.
Motivating Channel MembersA company needs to view its intermediaries in the same way as it views its endusers. To motivate its intermediaries, the company should provide trainingprograms, market research programs, other capability building programs toimprove the intermediarys performance.
Channel Power may be defined as the ability of the manufacturer to alter thechannel members behavior so that they take actions that they would not takeotherwise. Manufacturers can use the following types of power to manage the
channel partners.
Coercive Power
Reward Power
Legitimate Power
Expert Power
Referent Power
-
7/30/2019 Session 11 - MABD
16/22
12/16/2012 16
Channel Management Decisions
Evaluating Channel MembersA manufacturer needs to evaluate whether the channelpartners are actually delivering what the manufacturer ispaying them for. Hence producers must periodically evaluateintermediaries performance against such standards as sales-quota attainment, average inventory levels, customer delivery
time, treatment of damaged or lost goods and cooperation inpromotional and training programs.
Modifying Channel MembersA producer must periodically review and modify its channelarrangements. Modification becomes necessary when thedistribution channel is not working as planned, consumerbuying patterns change, the market expands, newcompetition arises, innovative distribution channels emergeand the product moves into later stages in the PLC.
-
7/30/2019 Session 11 - MABD
17/22
12/16/2012 17
Channel ConflictChannel conflict is generated when one channel members
actions prevent the channel as a whole in achieving its goal.
Types of Channel Conflict
Vertical Channel Conflict - Vertical channel conflict is a conflict
between different levels within the same channel. This could bebetween different stakeholders up or down the distribution line trying toexercise greater control.
Horizontal Channel Conflict - This involves a conflict betweenmembers at the same level within the channel.This would mean conflict between selling practices of variousdealerships.
Multi-channel conflict exists when the manufacturer has establishedtwo or more channel that sell to the same market.This would be predominantly seen when one of the channels may getlower price, such as internet banking for banking products rather thanthe financial intermediaries.
-
7/30/2019 Session 11 - MABD
18/22
12/16/2012 18
Channel Conflict
Causes of Channel Conflict
Following are the most prevalent causes of channel conflict.
Goal incompatibility Differences in the goals of the
manufacturer and the intermediary.
Difference in perception - Manufacturer may be looking atthe environment as optimistic and may want the dealers tocarry higher inventory but the dealers may not want to do so,considering the economic scenario.
Dependence - The dependence of the intermediaries on themanufacturer and his policies such as in the case ofautomobiles may cause channel conflict.
-
7/30/2019 Session 11 - MABD
19/22
12/16/2012 19
Channel Conflict
Managing Channel Conflict
There are several ways for effective channel conflict
management. They are as follows:
Co-optation This is an effort by one organization to win thesupport of the leaders of another organisation by including
them in the advisory councils, boards of directors etc.
Diplomacy This takes place when each side sends a person
or a group to meet with its counterpart to resolve the conflict.
Mediation This means resorting to a neutral third party who
is skilled in conciliating the two parties interests. Arbitration This occurs when the parties agree to present
their arguments to one or more arbitrators and accept the
arbitration decision.
-
7/30/2019 Session 11 - MABD
20/22
12/16/2012 20
Channel Conflict
Legal and Ethical Issues in Channel Relations
Many producers likes to develop exclusive channels
for their products. Exclusive dealing often includes
exclusive territory agreements.The producer may agree not to sell to other dealers in
a given area.
Producers are free to select their dealers, but their
right to terminate dealers is somewhat restricted.
-
7/30/2019 Session 11 - MABD
21/22
12/16/2012 21
E-Commerce Marketing Practices
E-business describes the use of electronic means andplatforms to conduct a companys business. There arevarious possible situations such as:
E-commerce means that a company or site offers to transact
or facilitate the selling of its products and services online.
E-purchasing means companies decide to purchase goods,services and information from various online suppliers.
E-marketing describes companys efforts to inform buyerscommunicate, promote and sell its product and services overthe internet.
-
7/30/2019 Session 11 - MABD
22/22
12/16/2012 22
top related