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Copyright © 2016 Pearson Education Ltd. 17-1
Chapter 17
DesigningAnd Managing
Integrated Marketing Channels
Copyright © 2016 Pearson Education Ltd. 17-2
Marketing Channelsand Value Networks
• Marketing channels– Sets of interdependent organizations
participating in the process of making a product or service available for use or consumption
– Intermediaries:• Merchants (buy and resel: wholesalers, retailors , • Agents (search for customers and may negotiate on the
producer’s behalf)• Facilitators (assist in the distribution process: transportation
companies, independent warehouses, banks, advertising agencies)
Copyright © 2016 Pearson Education Ltd. 17-3
Marketing Channelsand Value Networks
• A marketing channel system– The particular set of marketing channels a
firm employs– Push (sales force) vs. pull strategy
(advertising, promotion)
Copyright © 2016 Pearson Education Ltd. 17-4
Marketing Channelsand Value Networks
• The digital channels revolution– Customer support in
store/online/phone– Check online for product
availability at local stores– Order product online to
pick up at store– Return a product
purchased online to a nearby store
Copyright © 2016 Pearson Education Ltd. 17-5
Marketing Channelsand Value Networks
• Multichannel marketing– Using two or more
marketing channels to reach customer segments in one market area
– Omnichannel marketing– Integrated marketing
channel system
Copyright © 2016 Pearson Education Ltd. 17-6
Figure 17.1The Hybrid Grid
Copyright © 2016 Pearson Education Ltd. 17-7
Marketing Channelsand Value Networks
• Value network– A system of partnerships and alliances that a
firm creates to source, augment, and deliver its offerings
– Demand chain planning
Copyright © 2016 Pearson Education Ltd. 17-8
The Role ofMarketing Channels
• Channel functions and flows
Copyright © 2016 Pearson Education Ltd. 17-9
Figure 17.2Marketing Flows For Forklift Trucks
Copyright © 2016 Pearson Education Ltd. 17-10
The Role ofMarketing Channels
• Channel levels– Zero-level channel (direct ex. Mailorder, online selling,
telemarketing, manufacturer owned stores)– One/two/three-level channels (intermediaries)– Reverse-flow channels
• to reuse products or containers (such as refillable chemical-carrying drums)
• to refurbish products for resale (such as circuit boards or computers)
• to recycle products• to dispose of products and packaging
Copyright © 2016 Pearson Education Ltd. 17-11
Figure 17.3Consumer/Industrial Marketing Channels
Copyright © 2016 Pearson Education Ltd. 17-12
Channel-Design Decisions
• Analyzing different customer needs and wants during purchase process
SERVICE OUTPUTS OF CHANNELS Desired lot sizeWaiting and delivery time Spatial convenience Product variety Service backup
Copyright © 2016 Pearson Education Ltd. 17-13
Channel-Design Decisions
• Identifying major channel alternatives
Types of intermediaries
Number of intermediaries
Terms/responsibilities of channel members
Copyright © 2016 Pearson Education Ltd. 17-14
Identifying major channel alternatives
• Number of intermediaries– Exclusive
distribution– Selective
distribution– Intensive
distribution
Copyright © 2016 Pearson Education Ltd. 17-15
Channel-Design Decisions
• Evaluating major channel alternatives– Economic criteria– Control and adaptive criteria
Copyright © 2016 Pearson Education Ltd. 17-16
Channel-Management Decisions
Selecting channel
members
Training channel
members
Evaluating channel
members
Modifying channel design
Channel modification
decisions
Global channelconsiderations
Copyright © 2016 Pearson Education Ltd. 17-17
Training and Motivating Channel Members
• Channel partnerships and Efficient Consumer Response practices– Demand-side management (stimulating
demand collectively)– Supply-side management– Enablers and integrators (collaborative
information technology and process improvement tools to support joint activities that reduce operational problems)
Copyright © 2016 Pearson Education Ltd. 17-18
Channel Integration and Systems• Conventional marketing channel
– producer, wholesaler(s), and retailer(s). Each is a separate business, no complete control over other members
• Vertical marketing systems– unified system, one channel member owns or
franchises the others or has so much power that they all cooperate
• Horizontal marketing systems– two or more unrelated companies in the same industry
lacks the capital, know-how, production, or marketing resources to venture alone
Copyright © 2016 Pearson Education Ltd. 17-19
VerticalMarketing Systems
• Corporate VMS- single ownership
• Administered VMS- coordination through the biggest and most powerful member
• Contractual VMS– Franchise organizations
• New competition in retailing
Copyright © 2016 Pearson Education Ltd. 17-20
E-CommerceMarketing Practices
• E-commerce– Uses a Web site to transact or facilitate the
sale of products and services online• Pure-click vs. brick-and-click companies
Copyright © 2016 Pearson Education Ltd. 17-21
M-CommerceMarketing Practices
• Mobile channels and media can keep consumers as connected and interacting with a brand as they choose– Advertising and promotion– Geofencing (to target customers with a mobile promotion,
typically near or in a store)
• Privacy issues
Copyright © 2016 Pearson Education Ltd. 17-22
Conflict, Cooperation,and Competition
• Channel conflict– Generated when one channel member’s
actions prevent another channel member from achieving its goal
• Channel coordination– Occurs when channel members are brought
together to advance the goals of the channel instead of their own potentially incompatible goals
Copyright © 2016 Pearson Education Ltd. 17-23
Conflict, Cooperation,and Competition
• Types of conflict and competition
Horizontal channel conflict
Vertical channel conflict
Multichannel conflict
Copyright © 2016 Pearson Education Ltd. 17-24
Conflict, Cooperation,and Competition
• Causes of channel conflict
Goal incompatibility Unclear roles and rights Differences in perception Intermediaries’ dependence on
manufacturer
Copyright © 2016 Pearson Education Ltd. 17-25