Chapter 15 Electronic Marketing Channels (EMC): Online channels.
-
Upload
jesse-hugo-page -
Category
Documents
-
view
466 -
download
60
Transcript of Chapter 15 Electronic Marketing Channels (EMC): Online channels.
Major Topics for Ch. 15
1.What is it?
2.Trends in EMC
3.Structure of EMC*
4.Advantages and Disadvantages of EMC*
5.Implications of EMC
Electronic Marketing Electronic Marketing
ChannelsChannels
Topic 1:
TechnologyInternet
Computers
Impact on
Design & Management of Marketing Channels
Electronic Marketing Electronic Marketing ChannelsChannels
The use of online media to make products & servicesavailable so that the target market with access to
enabling technologies can shop& complete the transaction via interactive electronic means
Topic 2
Not physical availabilityInternet, Web-TV, Cell Phone
Actually purchasing products through the useof PCs, Web-TV, Cell Phones
Developments & Trends in Developments & Trends in EMCEMC
• Online shopping to $134 billion from mid-1990s to the end of 2009*
• Online shopping has become a routine shopping choice*
• PCs, peripherals, software, & booksaccounted for a significantportion of total retail spending onthese products
• Online shopping to $134 billion from mid-1990s to the end of 2009*
• Online shopping has become a routine shopping choice*
• PCs, peripherals, software, & booksaccounted for a significantportion of total retail spending onthese products
ElectronicMarketingChannels
* U.S. Department of Commerce
Still, Online Shopping is Relatively Small (2007 Figure)
E-commerce -In Manufacturing: $1,855 Billion 35.0% of Total Shipment
-In Wholesaling: $1,226 Billion 21.2% of Total Sales
-In Retailing: $127 Billion 3.2% of Total Retail Sales
E-commerce -In Manufacturing: $1,855 Billion 35.0% of Total Shipment
-In Wholesaling: $1,226 Billion 21.2% of Total Sales
-In Retailing: $127 Billion 3.2% of Total Retail Sales
Online Retail SalesOnline Sales as a Percentage of Total Retail Sales,
Holiday SeasonsCategory Online as % of
Total Retail Sales (2004)
Revenue
in Millions
2004 2005
Apparel/Clothing 16% $3.8B $5.3B
Toys/Video Games
11% $2.5B $2.3B
Consumer
Electronics
10% $2.3B $4.8B
Source: A.C. Nielsen’s Holiday E-spending Report
Channel Migration*
Spending
Distribution 2005
2002
Stores 68% 72% 74% 78%
Catalogs 5% 6% 6% 6%
Online 27% 22% 20% 16%
Source: A.C. Nielsen’s Holiday E-spending Report
2004 2003
Holiday Shopping across Channels
www.internetretailer.com
* What do you do if you are a store-based retailer?
Structure Structure of Electronicof ElectronicMarketing Channels*Marketing Channels*
ThreeKey
Phenomena
1. Reintermediation versus disintermediation
2. Information flow versus product flow
3. Virtual channel structure versus physical channel structure
Topic 3
1. Disintermediation and1. Disintermediation andReintermediationReintermediation
Disintermediation Reintermediation
Intermediaries becomesuperfluous because producers
gain exposure to vast numbers of customers in cyberspace
Shifting, changing, or addingmiddlemen to the channel
Amazon.comAuto-By-Tel Corp.
Peapod, Inc.Dell
Computer Corp.
Disintermediation Disintermediation versusversusReintermediation*Reintermediation*
No matter how technologically sophisticated the Internet becomes, the laws of economics as they relate to channel structure do not change.
Efficiency in the performance of distribution tasks is what ultimately determines what form channel structure will take.
=The Internet has not eliminated middlemen,
or caused total disintermediation.
2. Marketing Channel Flows2. Marketing Channel Flows
Product Flow
Promotion Flow
Information Flow*
Ownership Flow
Negotiation Flow
Ex) Pharmaceutical
Channels for Pharmaceuticals Physical Distribution Flow Information Flow
Manufacturer
Distributor
Pharmacy
patient
Manufacturer
PharmacyDoctor
patient
Insurer/HMO
PBM*
* Pharmacy Benefit Manager
Internet LimitsInternet Limits
Five Channel FlowsSome can not be handled by internet
Five Channel FlowsSome can not be handled by internet
Ex) Product Flow in Channel• Cannot be digitized
• Processed slowly, often by people
• Is basis for all other flows—negotiation, ownership, information, &promotion
3. Virtual (Online) Channel Structure Versus Conventional (Store) Channel Structure
• Different Market Segments
• Different Product or Services
• Complements rather than Replaces Each Other*
Advantages & Advantages & Disadvantages of EMC*Disadvantages of EMC*
Topic 4
Advantages ofElectronic
Marketing Channels
1. Global scope & reach2. Convenience/rapid transaction processing3. Information processing efficiency & flexibility4. Data-based management & relationship
capabilities5. Lower sales & distribution costs
Disadvantages ofElectronic
Marketing Channels
1. Lack of contact with actual products & delayedpossession
2. Fulfillment logistics not at Internet speed or efficiency*
3. Clutter, confusion, & cumbersomeness of Internet
4. Nonpurchase motives for shopping not addressed*
5. Security concerns of customers
Advantages & Disadvantages of Advantages & Disadvantages of EMC*EMC*
Implications of EMC Implications of EMC Topic 5
• Objectives & strategies of the firm & EMC*
• Role of EMC in the marketing mix
• Channel design & EMC*
• Channel management & EMC*
• Evaluation & EMC
Objectives & Strategies of the Objectives & Strategies of the Firm*Firm*
• Role of distribution more complex because
of electronic marketing channels
=• How to Integrate Online with Offline channels
* Offline only Online only Offline + Online (multichannel)
Ex) My research project
The Internet arms large numbers of customers with more information about products & services
to level the playing field
The fourth P, place (distribution), may assume a
larger role relative to the other three variables for
more & more firms
The Marketing MixThe Marketing Mix
Channel Design*Channel Design*
The channel manager should provide “channel-surfing” consumers with whatever channels or combinations of channels they desire
=
a) A facet of the development of an
effective multichannel marketing strategy
b) Unbundle Channel Functions
* Special topic: PIC (Partially Integrated Channel)
DUAL DISTRIBUTION WITH EMC : CHANNEL STRUCTURE OPTIONS
(a) Manufacturer has own online presence (e.g., Tupperware)
(dotted line indicates common ownership)
Manufacturer(Tupperware)
Owned Internet Sales Channel
(tupperware.com)
Standard Channel(independent
direct salespeople)
Consumers
DUAL DISTRIBUTION WITH EMC: CHANNEL STRUCTURE OPTIONS
(b) Manufacturer sells through third-party online reseller
(e.g, Callaway Golf selling through buy.com)
Manufacturer(Callaway Golf)
Independent Internet Sales Channel
(buy.com)
Standard Channel(pro shops, bricks &
mortar sports/golf outlets)
Consumers
DUAL DISTRIBUTION WITH ONLINE SELLING: CHANNEL STRUCTURE OPTIONS
(c) Manufacturer sells through some standard channels that do operate their own online store, and some that do not
Manufacturer(Simon & Schuster, Publisher)
Standard Channel(bricks & mortar
bookstores)Barnes & Noble
Barnes & Noble bricks & mortar
bookstores
Barnes & Noble Internet Sales Channel
(bn.com)
Consumers
Channel Management*Channel Management*
Multichannel challenge of conventional and
electronic channels
=
The fundamental issues of motivating channel members, building cooperation, managing conflict, & coordinating elements of the marketing mix requires manager’s full attention
Key Issue: Channel Conflict
Evaluation of PerformanceEvaluation of Performance
Likely to change Unlikely to change
Specific criteria for Performance expectations,
performing evaluations & criteria, & measurement of
technological means for how well they are being met
doing so by channel members
Ex) Store Traffic Measure
What drives sales impact of online channel addition?
•Steve Kim (ISU) and Sam Min (CSULB)
•Question: For store-based retailers, does adding online channel lead to more sales?
0.00
0.05
0.10
0.15
0.20
0.25
98 99 100 101 102 103 104 105
Calendar Year less 1900
Sh
are
Clothes
Book & CD
Sports
Off ice
Electronics
Likely Drivers
•Channel Disruption (Potential for Displacement)*
•Timing: Chronological Time and Order of addition
•Incumbent Retailer Resource: Scale of Physical store-based business
•Incumbent Retailer Resource: Retailer’s Brand Equity