Marekting Channels&Value Networks

8/4/2019 Marekting Channels&Value Networks

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How should companies

integrate channels andmanage channel conflict?


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Channel Integration and Systems


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A conventional marketing channel comprises an

independent producer, wholesaler(s), andretailer(s)

Conventional Marketing Channel


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Vertical Marketing System

Comprises the producer, wholesaler(s) and

retailer(s) acting as a unified system. One

channel member, the channel captain, owns theothers or franchises them or has so much

power that they all corporate.


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Corporate VMS

Combines stages of production, anddistribution under single ownership.


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Administered VMS

Coordinates successive stages ofproduction and distribution through the

size and power of one the members


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Administered VMS

Coordinates successive stages ofproduction and distribution through the

size and power of one the members


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Distribution programming

Building a planned, professionallymanaged vertical marketing system that

meet the needs of both the

manufacturer and the distributors.


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Contractual VMS

Consist of independend firms atdifferent levels of production and

distribution integrating their programs

on a contractual basis to obtain more

economies or salesimpact than theycould achieve alone.


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Wholesaler-sponsored voluntaryChains

Retailer Cooperatives

Franchise Organizations


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Horizontal Marketing System

2 or more unrelated companies put together

resources or programs to exploit an emergingmarketing opportunity.


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Multiichannel Marketing Systmes

Occurs when a single firm uses 2 or more

marketing channels to mreach customersegments.


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Strategic Marketingchannel system

Strategies and tactics of selling throughone channel reflect the strategies of

selling through other channels.


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By adding more channels, companies can gain

3 important benefits.

Increase market coverage

Lower channel cost

More customized selling


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Conflict, Cooperation, and Competition


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Channel conflict

Generated when one channel members

actions prevent the channel from achieving itsgoal


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Channel cooridnation

Occurs when channel memebers are brought

together to adbvance the goals of the channel,as opposed to their own potentially

incompatible goals


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Types of conflict andcompetition

Vertical Channel conflict

- between different levelswith in the same channel

Horizontal Channel conflict

- between members at the same level with in the channel

Multichannel conflict

- Exist when manufacturers has established 2 or more

channels that sell to the same market.


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Causes of Channel Conflict

Goal Incomapatibility

Unclear roles and rights

Deferences in perception

Intermediaries dependence on themanufacturer


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Adoption of superordinate goals

Exchange persons between 2 or more channel

levels

Co-optation

Diplomacy, mediatiorn or arbitration

Managing Channel Conflict

Documents

Marekting Channels&Value Networks