Marketing ChannelsModule 2: Channel Roles in a Dynamic Marketplace

Preparation for the Marketing Channels exam at Edinburgh Business SchoolContent extracted from the text book by Lou E. Pelton, Dr. David Strutton, and Dr. James R. Lumpkin

All pictures used for educational purposes only. No copyright infringement intended.

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2. Channel Roles in a Dynamic Marketplace

The principle of interspecific competition suggests that channel members must fight to achieve competitive advantages. Three outcomes are possible:

CompetitiveSuperiority

RestrictiveRanges

CharacterDisplacement

2.1 Channel Behaviors in Competitive Environments

Interspecific Competition in Marketing ChannelsBusiness life, unlike life in the mythological jungle, is first of all

fundamentally cooperative. It is only within the bounds of mutually shared concerns that competition is possible.

2.1 Channel Behaviors in Competitive Environments

Changing Environments: A Shared ConcernDifferential advantages emerge from an organization’s distinctive

characteristics, if these properties set it apart from competitors in ways that prove enticing to customers.

2.1 Channel Behaviors in Competitive Environments

Diversity in Complex EnvironmentsEnvironmental diversity refers to the variety of environmental forces facing a channel member.

Supplier Relationships

CustomerRelationships

LateralRelationships

2.2 Channel Roles in the Exchange System

Three types of channel relationships exist:

2.2 Channel Roles in the Exchange System

Channel roles are the sets of activities or behaviors assigned

to each intermediary in a channel system.

2.2 Channel Roles in the Exchange System

Role identity specifies the traits of an individual or organization that are considered

appropriate to and consistent with the performance of a given channel role.

2.3 Supplier Relationships

Wholesaler Classification:Merchant wholesalers

Manufacturer’s sales organizations (MSOs)Agents (also known as brokers)

Commission merchants

2.4 Customer Relationships: Changing technology and trends

more electronic shoppingmore mail-order catalog/direct mail

more manufacturer’s outletshypermarkets

2.5 Lateral Relationships

Lateral relationships feature a sort of ‘co-opetition’ – note how the term

blends cooperation with competition.

2.6 Establishing Channel Role Identities: SIFTing Process

The overriding purpose of channels is to serve

consumer and end-user needs.

2.6

ServicesProvision of value-added services.

InnovationIntroduction of new methods or technologies to strengthen exchange relationships within channels.

FlexibilityAbility to successfully accommodate exchange partners’ needs as environmental and process conditions change.

TimingTimely delivery, a key component of channel efficiency, is a primary part of role identity.

Establishing Channel Role Identities: SIFTing Process

Picture sources:

http://compacttravels.files.wordpress.com/2009/11/floating-market-3.jpg

http://blogs.edweek.org/teachers/coach_gs_teaching_tips/Classroom%20Competition%20Arm%20Wrestling.jpg

http://www.sanfordfl.gov/images/pool/pool_race.jpg

http://www.3rdidea.com/home/wp-content/uploads/2011/11/stand_out_in_a_crowd.jpg

http://images2.wikia.nocookie.net/__cb20111016021805/lego/images/7/76/Series7Pic.jpg

http://www.freakingnews.com/pictures/77500/Barack-Obama-and-Michelle-Changing-Roles-77657.jpg

http://fc03.deviantart.net/fs71/i/2010/037/1/5/we_are_all_the_same_by_user11.jpg

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