Ch#5 Strategy in M Channels

8/9/2019 Ch#5 Strategy in M Channels

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Chapter 5Chapter 5

Strategy in Marketing Channels

Marketing Channel StrategyMarketing Channel Strategy

55Objective 1:

The broad princ iples by which the firm

expects to achieve its distributionobjectives for its

target market(s)

Channel Strategy:

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Distribution DecisionsDistribution Decisions

Objective 2:

1. The role of distribution in the firms overallobjectives & strategies

2. The role distribution should play in the marketing

mix

3. The design of the firms marketing channels

4. The selection of channel members

5. The management of the mar keting channel in order

to implement the firms channel design effectively &efficiently on a continuing basis

6. The evaluation of channel member performance

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Channel Strategy as OverallChannel Strategy as OverallCorporate ObjectiveCorporate Objective

Objective 3:

The higher the priority given todistribution, the higher the levelat which it should be consideredin formulating the organizationsoverall objecti ves and strategies


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55The Value ChainThe Value Chain

Firminfrastructure

Human resource management

Technology development

Human resource management

Inbound Operations Outbound Marketing Service

logistics logistics & sales Margin

MarginSupportActivities

Primary Activities

55Determining the Priority Giv enDetermining the Priority Giv ento Distributionto Distribution

Distributiondoesincreasingly warrantthe attention of top management,because competition has made the

issue of distribution too important fortop management to ignore.

Coca-Cola

Procter & Gamble Company

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Channel Strategy & the Marketing MixChannel Strategy & the Marketing Mix

Objective 4:

The essence of modern marketingmanagement:

To dev elop a market ing

mix of product, price,

promotion, & distribution

(place)

55Objective 5:

Emphasis on Distribution StrategyEmphasis on Distribution Strategy

Distribution is the most relevant variable forsatisfying 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


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Target Market DemandTarget Market Demand55

Firms should stress distr ibution when itserves customers needs in the target

market.

Marketing channels are so closel y linked tocustomer need satisfaction because it is through

distr ibution that firms can provide the kinds andlevels of service that make for satisfied

customers.

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Competitive ParityCompetitive Parity

Distribution advantages are not easilycopied by competitors.

Distribution advantages are based on acombination of superior strategy, organization,

and human capabilities.

55Distribution NeglectDistribution Neglect

Competitors neglect of distributionstrategies provides excellent opportunities.

The channel manager must analyze targetmarkets to determine whether competitors haveneglected distribution and whether vulnerabilities

exist that can be exploite d.

Distribution and SynergyDistribution and Synergy55

Hooking up with a mix of cooperativechannel members will strengthen the

channel.

Because each channel member is anindependent entity, rewarding opportunities exist

for channel managers to cultivate cooperationamong members.


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55Differential AdvantageDifferential Advantage& Channel Design& Channel Design

Objective 6:

Differential advantage, also called sustainablecompetitive advantage, occurs when a firmattains 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 alliancethat offersrecognizable benefits to the

manufacturer & channel members on along-term basis

Infiniti

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Selection of Channel MembersSelection of Channel MembersObjective 7:

Reflect channel strategies the firm has developed toachieve its distribution objecti ves

Be consistent with the firms broader marketingobjectives & strategies

Reflect the objectives & strategies of the organizationas a whole

Because customers perceive channel

members as an extension of the manufacturers ownorganization, members should:


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Channel Strategy & Managing theChannel Strategy & Managing theChannelChannel

55Objective 8:

3Strategic

Questions

Howclose a relationship

should be developedwith the channel

members?

Howshould the channelmembers be motivated to cooperate

in achieving the manufacturersdistribution objectives?

Howshould the

marketing mix be used toenhance channel

member cooperation?

Closeness of Channel RelationshipsCloseness of Channel Relationships55

Distribution intensity

Targeted markets

Products

Company policies

Middlemen

Environment

Behavioral dimensions

Factors to consider

Continuum portraying Degree of Closeness of Manufacturer with

Channel members


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Continuum of Intensity of Distribution

Motivation of Channel MembersMotivation of Channel Members

55Objective 9:

Portf olio concept:

A tool for motivating different typesand sizes of channel members participating

in various channel structures who may responddifferently to various motivation strategies.

Menu of Common Channel Tactics forMotivating Channel Members


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Matrix of Vertical & Horizontal portfolios of Channel Structures

& MembersMarketing Mix inMarketing Mix in

Channel ManagementChannel Management

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Marketing

Mix

Productstrategy

Pricing

strategy

Promotionstrategy

Distributionstrategy

Relationships/Interfaces

55Channel Strategy &Channel Strategy &

Ev aluation of Channel MemberEv aluation of Channel MemberPerformancePerformance

Objective 10:

Have provisions been made in the design andmanagement of the channel to assure that

channel member performance wil l beevaluated effecti vely?

Channel managers involvementin evaluating member performance is integral to

developing & managing channel

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