ch03- the environments of marketing channels
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Chapter 3The Environment of Marketing Channels
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The Environment 3Objective 1:
Consists of all externaluncontrollable factors within which marketing channels exist
Affects channel members and nonmembers, such as facilitating agencies =All channel participants
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3Nonmember participantsThe EnvironmentEnvironment
EconomicSocioculturalCompetitiveTechnologicalLegalProducers& ManufacturersIntermediariesTarget MarketsFacilitatingagencies MemberparticipantsLocus ofchannelmanagement
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3
The Economic EnvironmentObjective 2:
Major EconomicForcesRecessionInflationDeflation
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3Recession
Consumer and/orCorporate spending =Channelstrategy: Manufacturers provide channel member support by financing high inventory costs
Reduced sales volumeReduced profitabilityFirms caught with large inventories
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InflationContinued high spendingOR Spending, fueling a recession Possible channel strategy: Reduce manufacturers product mix from higher-price to lower-price products Reduce inventory burden on members with:Streamlined product lineFaster order processing & deliveryHigher inventory turnover through stronger promotional support
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DeflationPrices
Challenge:Pass cost-induced price increases through channelwhen built-in cost pressures from labor contracts were negotiated several years earlier
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Other Economic Factors Real interest rates
Demand Costs=1.2.
Strong U.S. Dollar
Difficult to sellproducts throughchannel members
= U.S. products less competitive
Objective 3:
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The Competitive Environment3
Objective 4:Global in scope
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Types of CompetitionObjective 5:HorizontalIntertypeVerticalChannel System
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Horizontal CompetitionMWRRWM
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Intertype Competition
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MWRMWR
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Vertical CompetitionMRW
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Channel System CompetitionMMMMMM
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The Sociocultural EnvironmentObjective 6:Pervades all aspects of a society
Influences both national and internationalmarketing channels
Influences wide variations among channel structures worldwide
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Sociocultural Developments3
Population Age Patterns
Ethnic Mix
Educational Trends
Family or Household Structure U.S. pop. Becoming both younger & older # of minority-owned businesses Levels = people more demanding Smaller & more variedRole of Women # = changing shopping needs
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The Technological Environment3
Objective 7:Help retailers & wholesalers closely monitor success orfailure of products they handle
ScannersComputerized inventory management& Portable computers
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The Technological Environment3
EDI - Electronic Data Interchange
Links together channel information systems Provides real-time responses Enhanced by Internet
= Enhanced Distribution Efficiency
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The Technological Environment3
AcceleratingtechnologyComputer salesPeopleMobilerobots3-D modelingUltra-widebandtechnology
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The Legal EnvironmentThe set of laws that impact marketing channels
Objective 8: Continually evolving Affected by changing values, norms, politics, & precedents Knowledge of basics helps channel manageravoid serious & costly legal problems
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Legislation Affecting Marketing Channels 3
Sherman Antitrust Act 1890; Fundamental antimonopoly law Public welfare best served through competition
Clayton Act 1914; Strengthen Sherman Antitrust Act Prohibits specific practices among competing firms
Federal Trade Commission Act 1914; Established FTC Power to investigate & enforce
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Legislation Affecting Marketing ChannelsRobinson-Patman Act 1936; Amendment to Clayton Act Prohibits price discrimination Allows price differentials to different customersunder specific circumstances
Celler-Kefauver Act 1950; Amendment to Clayton Act Prohibits vertical mergers & acquisitions
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Legal Issues in Channel Management3Objective 9: Dual Distribution, or multi-channel distributionProducer or manufacturer uses 2 or more different channel structures for distributing the same productExclusive DealingSupplier requires its channel members to sell only its products or to refrain from selling directly to competitive suppliersFull-Line ForcingSupplier requires channel members to carry a full-line of its products in order to sell any particular products in suppliers line
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Legal Issues in Channel Management3
Price DiscriminationSupplier sells at different prices to the same class of channel membersPrice MaintenanceSupplier dictates prices charged by channel members to their customers Refusal to DealSupplier has right to refuse to deal with whomever they want as channel members
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Legal Issues in Channel Management3
Resale RestrictionsManufacturer attempts to stipulate to whom and in what geographical market channel members may resell the manufacturers productsTying AgreementsSupplier sells a product to a channel member on condition that the channel member also purchase another product Vertical IntegrationFirm owns and operates organizations at other levels of the distribution channel