Marketing Channels
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Transcript of Marketing Channels
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Marketing Channels
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Contents
Marketing Channels – An Intro1
Channel Design2
Channel Evaluation3
Channel Management4
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Marketing Channels
They are set of interdependent organizations involved
in all the marketing activities and process of making a
product or service available for use or consumption.
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Intermediaries
Merchants: Intermediaries who buy, take title to and resell the
merchandise.
Agents : Brokers, manufacturers representatives, sales agents who
search for customers & negotiate for producers.
Facilitators: Who assist in the distribution process .
Ex : Warehouses, ad agencies , logistic
companies etc.
( Distribution function only)
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Importance – Marketing channels
a) Creation of markets
b) Creation of potential buyers
c) Involved in the distribution of products and services.
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Push and Pull strategy
Push strategy:
Involves use of manufacturers sales force, trade promotion and other means to induce intermediaries to promote the product .Used when there is low brand loyalty in the category
Pull strategy:
In this advertisement, promotion and other forms of communication is used to persuade the consumers. Its used when there is high brand loyalty & involvement.
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Multi channel Marketing
Hybrid or Multichannel marketing – when firm uses two
or more marketing channels to reach the customer segments.
Channel integration is expected by customers.
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Value networks
It’s a system of partnerships and alliances that a firm creates to
source, augment and deliver its offerings. Suppliers, immediate
customers and end customers are part of it .
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Demand chain planning
Company first think of the Target market and then design the
supply chain backward from that point.
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Channel Functions
• Gather information
• Develop and disseminate persuasive communications
• Reach agreements on price and terms
• Acquire funds to finance inventories
• Assume risks
• Provide for storage
• Provide for buyers’ payment of their bills
• Oversee actual transfer of ownership
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Channel levels
• Zero level \ Direct marketing channel .
• Two level and Three level marketing channels
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Consumer & Industrial marketing channels
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Service channels
Service industries utilizing Internet, mobile and other technologies .
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Designing a Marketing Channel System
Analyze customer needs
Evaluate major channel alternatives
Identify major channel alternatives
Establish channel objectives
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Channel Service Outputs
• Lot size: Number of units the channel permits a typical customer
to purchase on one occasion
• Waiting/delivery time: Average time customers of that channel
wait for receipt of the goods
• Spatial convenience: degree to which the marketing channel
makes it easy for customers to purchase the product
• Product variety: assortment breadth provided by the marketing
channel
• Service backup—add-on services (credit, delivery, installation,
repairs) provided by the channel
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Identifying Channel Alternatives
Types of intermediaries
Number of intermediaries
Terms and responsibilities
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Strategies adopted based on no of intermediaries include
I. Exclusive distribution : Limited number of intermediaries.
II. Selective distribution : Relies on only some of the
intermediaries for a particular product.
III. Intensive distribution : large number of intermediaries involved.
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Terms and responsibilities of intermediaries
• Price policy—price list and schedule of discounts and allowances
for the intermediaries
• Condition of sale —payment terms and producer guarantees
• Distributors’ territorial rights—distributors’ territories and the
terms under with the producer will enfranchise other distributors
• Mutual services and responsibilities
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Evaluation criteria of Channel alternatives
a) Economic
b) Control
c) Adaptive
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The Value-Adds Versus Costs of Different Channels
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Channel Management decisions
Selecting channel members
Training channel members
Motivating channel members
Evaluating channel members
Modifying channel members
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Training and motivating channel members
Training , MR and other capacity building programmes to
motivate and improve intermediaries performance
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Channel Power
• Ability to alter channel behavior so they function in a desired
• way which they would not have . Different types of channel power
• Coercive--threat
• Reward—extra benefit
• Legitimate--contract
• Expert--knowledge
• Referent—proud to be associated