Channel Management
description
Transcript of Channel Management
Selecting andManaging Marketing Channels
Anas Iftikhar
2815
Strategic Marketing Management
1. What is meant by a marketing channel?
A: A marketing channel consists of individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users.
• Marketing Channels for Consumer Goods and Services
Direct Channel
Indirect Channels
CHANNEL STRUCTURE AND ORGANIZATION
FIGURE: Common marketing channels for consumer goods and services
• Marketing Channels for Business Goods and Services
Industrial Distributor
Agent
CHANNEL STRUCTURE AND ORGANIZATION
FIGURE 13-4 Common marketing channels for business goods and services
CHANNEL CHOICE AND MANAGEMENT
• Factors in Choosing a Marketing Channel
Provide the Best Target Market Coverage
Best Satisfy the Target Market’sBuying Requirements
Be the Most Profitable
CHANNEL CHOICE AND MANAGEMENT
Target Market Coverage
• Intensive Distribution
• Exclusive Distribution
• Selective Distribution
• Factors in Choosing a Marketing Channel
15 | 9
Intensity of Market Coverage
• Intensive Distribution– Using all available outlets to distribute a product.
• Convenience products with high replacement rates
– Provides availability and reduces search time
– Availability is more important than outlet type
15 | 10
Intensity of Market Coverage (cont’d)
• Selective Distribution– Using only some available outlets to distribute a
product• Shopping products and durable
goods with low replacement rates
– High qualification requirements for intermediaries to distribute, sell, service, and support products
Toyota’s Only
Authorized Dealer
15 | 11
Intensity of Market Coverage (cont’d)
• Exclusive Distribution– Using a single outlet in a fairly large geographic
area to distribute a product• Expensive, high-quality products purchased
infrequently
– Exclusive outlets provide an incentive to sellers in limited markets
– Dealers carry complete inventory and have trained staff for sales and service
CHANNEL CHOICE AND MANAGEMENT
Satisfying Buyer Requirements
• Lot Size
• Convenience
• Variety
• Services Backup
Reduction in number of contacts
• Factors in Choosing a Marketing Channel
• Waiting time
How a Distributor Reduces theNumber of Channel Transactions
= Customer= Manufacturer
A. Number of contacts without a distributor
M x C = 3 X 3 = 9
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32
456
789
How a Distributor Reduces theNumber of Channel Transactions
= Distributor= Customer= Manufacturer
B. Number of contacts with a distributorM x C = 3 + 3 = 6
Store
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Conventional Distribution Channel vs. Vertical Marketing Systems
Verticalmarketingchannel
Manufacturer
Retailer
Conventionalmarketingchannel
Consumer
Manufacturer
Consumer
Retailer
Wholesaler
Wh
ole
sale
r
Channel Conflict
• What types of conflict arise in channels?
• What causes channel conflict?
• What can be done to resolve conflict situations?
What is Channel Conflict?
• In channel distribution, conflict is not negative, rather, some conflict actually strengthen and improves a channel.
• “Channel conflict arises when the behavior of a channel member is in opposition, to its channel counterpart. It is opponent centered and direct, in which the goal or object sought is controlled by the counterpart.”
Coughlan, Anderson,
Types of Channel Conflict• Vertical Channel Conflict - conflict between different
levels within the same channel.
• Horizontal channel conflict - involves conflict between members at the same level within the channel.
• Multichannel conflict - exists when the manufacturer has established two or more channels that sell to the same market.
Horizontal and Vertical Conflict in Marketing Channels
Causes of Channel Conflict
• Goal Incompatibility
• Unclear Roles And Rights
• Differences In Perception
• Intermediaries’ Great Dependence
Managing Channel Conflict
• Adoption of superordinate goals• Exchange persons between channel levels• Cooptation• Diplomacy, mediation, arbitration for chronic
or acute conflict