Download - Developing the Marketing Channel
Part 2Part 2
Developing the Marketing Channel
Chapter 5Chapter 5
Strategy in Marketing Channels
Marketing Channel StrategyMarketing Channel Strategy
55Objective 1:
The broad principles by which the firm expects to achieve its
distribution objectives for its target market(s)
Channel Strategy:
55
Distribution DecisionsDistribution Decisions
Objective 2:
1. The role of distribution in the firm’s overall objectives & strategies
2. The role distribution should play in the marketing mix
3. The design of the firm’s marketing channels4. The selection of channel members5. The management of the marketing channel in
order to implement the firm’s channel design effectively & efficiently on a continuing basis
6. The evaluation of channel member performance
55
Channel Strategy as Overall Channel Strategy as Overall Corporate ObjectiveCorporate Objective
Objective 3:
The higher the priority given to distribution, the higher the levelat which it should be consideredin formulating the organization’s overall objectives and strategies
55The Value ChainThe Value Chain
Firm infrastructure
Human resource management
Technology development
Human resource management
Inbound Operations Outbound Marketing Service logistics logistics & sales Margin
MarginSupportActivities
Primary Activities
55Determining the Priority Given Determining the Priority Given to Distributionto Distribution
Distribution does increasingly warrantthe attention of top management,because competition has made the
issue of distribution too important fortop management to ignore.
• Rayovac Corp.• WD-40• Coca-Cola• Procter & Gamble Company
55Channel Strategy & the Channel Strategy & the
Marketing MixMarketing Mix
Objective 4:
The essence of modern marketingmanagement:
To develop a marketing mix of product, price,
promotion, & distribution(place)
55Objective 5:
Emphasis on Distribution Emphasis on Distribution StrategyStrategy
• Distribution is the most relevant variable for satisfying target market demands.
• Parity exists among competitors in the other three variables of the marketing mix.
• A high degree of vulnerability exists because of competitors’ neglect of distribution.
• Distribution can enhance the firm by creating synergy from marketing channels.
IF:
THEN:
or
or
or
The firm should choose distribution strategy for strategic emphasis
Target Market DemandTarget Market Demand55
Firms should stress distribution when it serves customers’ needs in the
target market.
Marketing channels are so closely linked to customer need satisfaction because it is through distribution that firms can provide the kinds and levels of service that make
for satisfied customers.
55Competitive ParityCompetitive Parity
Distribution advantages are not easily copied by competitors.
Distribution advantages are based on a combination of superior strategy,
organization, and human capabilities.
55Distribution NeglectDistribution Neglect
Competitors’ neglect of distribution strategies provides excellent
opportunities.
The channel manager must analyze target markets to determine whether
competitors have neglected distribution and whether vulnerabilities exist that can
be exploited.
Distribution and SynergyDistribution and Synergy 55
“Hooking up” with a mix of cooperative channel members will
strengthen the channel.
Because each channel member is an independent entity, rewarding
opportunities exist for channel managers to cultivate cooperation among members.
55Differential Advantage Differential Advantage & Channel Design& Channel Design
Objective 6:
Differential advantage, also called sustainablecompetitive advantage, occurs when a firm attains a long-term, advantageous position
in the market relative to competitors.
• Caterpillar
55Positioning the ChannelPositioning the Channel
A firm that plans the channel and makesdecisions by viewing the relationship
with channel members as a partnershipor strategic alliance that offersrecognizable benefits to the
manufacturer & channel members on a long-term basis
• Infiniti
55Selection of Channel MembersSelection of Channel Members
Objective 7:
• Reflect channel strategies the firm has developed to achieve its distribution objectives
• Be consistent with the firm’s broader marketing objectives & strategies
• Reflect the objectives & strategies of the organization as a whole
Because customers perceive channelmembers as an extension of the
manufacturer’s own organization, members should:
Channel Strategy & Managing Channel Strategy & Managing the Channelthe Channel
55Objective 8:
3StrategicQuestions
How close a relationship should be developed
with the channelmembers?
How should the channelmembers be motivated to cooperate
in achieving the manufacturer’s distribution objectives?
How should the marketing mix be used to
enhance channelmember cooperation?
Closeness of Channel Closeness of Channel RelationshipsRelationships
55
• Distribution intensity• Targeted markets• Products• Company policies• Middlemen• Environment• Behavioral dimensions
Factors to consider
Marketing Mix inMarketing Mix inChannel ManagementChannel Management
55
MarketingMix
Product strategy
Pricing strategy
Promotionstrategy
Distributionstrategy
Motivation of Channel MembersMotivation of Channel Members55Objective 9:
Portfolio concept:
A tool for motivating different typesand sizes of channel members participating
in various channel structures who may responddifferently to various motivation strategies.
55
Evaluation of Channel MemberEvaluation of Channel MemberPerformancePerformance
Objective 10:
Have provisions been made in the design andmanagement of the channel to assure that
channel member performance will be evaluated effectively?
Channel manager’s involvementin evaluating member performance is integral to
developing & managing channel