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    CH 15 Marketing Channels

    Uploaded by

    Bhanu Garia
    This document discusses marketing channels and channel management. It defines marketing channels as the set of organizations involved in making a product available to consumers. It discusses channel structure and functions like transportation, financing, and risk taking. Channel design decisions include analyzing customer needs, setting objectives, identifying alternatives, and evaluating options. Channel management involves selecting and training channel members and resolving conflicts between members. The goal is to efficiently deliver products while meeting customer service requirements.

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    Attribution Non-Commercial (BY-NC)
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    CH 15 Marketing Channels

    Uploaded by

    Bhanu Garia
    285 views33 pages
    This document discusses marketing channels and channel management. It defines marketing channels as the set of organizations involved in making a product available to consumers. It discusses channel structure and functions like transportation, financing, and risk taking. Channel design decisions include analyzing customer needs, setting objectives, identifying alternatives, and evaluating options. Channel management involves selecting and training channel members and resolving conflicts between members. The goal is to efficiently deliver products while meeting customer service requirements.

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    marketing channels ..their types and nature ..

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    Ch 15 Marketing Channels.ppt

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    This document discusses marketing channels and channel management. It defines marketing channels as the set of organizations involved in making a product available to consumers. It discusses channel structure and functions like transportation, financing, and risk taking. Channel design decisions include analyzing customer needs, setting objectives, identifying alternatives, and evaluating options. Channel management involves selecting and training channel members and resolving conflicts between members. The goal is to efficiently deliver products while meeting customer service requirements.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    285 views33 pages

    CH 15 Marketing Channels

    Uploaded by

    Bhanu Garia
    This document discusses marketing channels and channel management. It defines marketing channels as the set of organizations involved in making a product available to consumers. It discusses channel structure and functions like transportation, financing, and risk taking. Channel design decisions include analyzing customer needs, setting objectives, identifying alternatives, and evaluating options. Channel management involves selecting and training channel members and resolving conflicts between members. The goal is to efficiently deliver products while meeting customer service requirements.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 33
    At a glance
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    The key takeaways are about marketing channels, their objectives, design decisions, management decisions and conflict resolution.

    A marketing channel is a set of interdependent organizations involved in making a product or service available for use or consumption, and includes intermediaries like agents, facilitators, distributors, wholesalers and retailers.

    The functions of marketing channels include gathering customer information, developing communication, facilitating transactions, financing inventory, assuming risks, storage and movement of products, helping with payments, overseeing transfers of ownership, packing/unpacking, developing new customers.

    Marketing Channels

    OBJECTIVES
    Introduction Functions of Marketing Channels Channel Design Decisions Channel Management Decisions Managing Channel Conflict

    1. What is a Marketing Channel?


    This is a set of interdependent organizations involved in the process of making a product or service available for use or consumption.

    Intermediaries involved
    Agents acting on behalf of buyer or seller but do not take title of the goods Facilitators transporters, banks. Distributors- term more common in business markets. Sells goods, maintains inventory, extends credit etc. Wholesalers- term used in consumer markets Retailers- sells to consumers

    Structure in Industrial Market

    Structure in Consumer Market

    Advantages
    Key external resource Movement of goods is essential Production & company survival depends on goods reaching consumers.

    Why would a manufacturer not like to do his own distribution?


    Lacks the financial resources to do direct marketing Cannot have the infrastructure to make the product widely available and near the customer Trading profits could be less than manufacturing profits

    Manufactures typically produce a large quantity of a limited variety of goods


    Consumers usually desire a small quantity of a wide variety of goods

    If all manufacturers tried to reach all consumers


    M1 C1

    M2

    C2

    M3

    C3

    If they tried to go through an intermediary


    M1 C1

    M2

    D1

    C2

    M3

    C3

    2. Channel functions
    Gathers information on customers, competitors and other external market data Develop and disseminate persuasive communication to stimulate purchases Agreement on price and other terms so that transfer of ownership can be effected Placing orders with manufacturers

    Channel functions (contd)


    Acquire funds to finance inventories and credit in the market Assume responsibility of all risks of the trade Successive storage and movement of products Helps buyers in getting their payments through with the banks Oversee actual transfer of ownership

    Channel functions (contd)


    Packing and unpacking Breaking Bulk Developing new customers

    3. Channel Design Decisions


    A. Analyze customers desired service output level B. Establish objectives C. Identify major channel alternatives D. Evaluate the major alternatives

    3A. Analyze customers desired service output level


    The company needs to identify the lot size, waiting time, spatial convenience, product variety and service back up requirement of consumers.

    3B. Establish objectives


    Channel objectives should be stated in terms of targeted service output levels. Channel institutions should also try to minimize total channel costs to desired service level output. Objectives vary with product characteristics example, perishables require more direct marketing

    3C. Identify major channel alternatives


    It includes decisions about types of intermediaries no. of intermediaries terms & responsibilities of channel members

    Types of intermediaries
    Agents Distributors Wholesalers Retailers

    No. of Intermediaries
    Exclusive Selective Intensive

    Terms and Responsibilities


    Rights and responsibilities are drawn up Territorial rights are fixed Pricing policies is fixed by producer by establishing a price list & schedule of discount Conditions of sales refer to payment terms & producer guarantees

    3D. Evaluating major alternatives


    Economic Criteria Control & Adaptive Criteria

    4.Channel management Decisions


    It includes decision on following: Selecting channel members Training channel members Motivating channel members Modifying channel arrangements

    4A. Selecting Channel Members


    For consumers, the channels are the company. They should be evaluated on the basis of no. of years in the business, products carried, growth & profit record, financial strength, reputation, cooperativeness, type of distribution experience (one step/ two step), expected rewards etc.

    4B. Training Channel Members


    Example Microsoft requires third party service engineers to complete a set of courses and take certification exams. Ford develops training programs that can be delivered over internet to its dealers.

    4C. Motivating channel members


    Coercive (threat to end relation) Reward (extra benefit for doing specific functions) Legitimate (as per contract) Expert (special knowledge of manufacturer that is valued by intermediaries) Referent (Reputed manufacturer so intermediaries like to be associated with it)

    4D. Channel modification


    With time channels need to change along with product as it get older in the PLC Introduction company showrooms Growth chain stores, departmental stores Maturity Mass merchandisers Decline sales stores, discount stores

    Adding channels
    Advantages Increased market coverage Lower channel costs More customised selling Disadvantages Increases selling costs Increases channel control Breeds channel conflict

    5. Channel conflict
    Interest of different business interests do not necessarily coincide Conflicts can occur at various levelsvertical, horizontal or multichannel

    Conflict causes
    Goal incompatibility Differences in perception Domain conflict

    Conflict Resolution
    Institutional Mechanism (joint membership in trade organizations, executive exchanges, co-optation, dealer councils) Third party mechanisms (mediation & arbitration) Negotiation (aggressive, accommodating, collaborative, avoidance)

    Aggressive Only self interest is considered without giving any attention to the other party Accommodating The other partys interests are given maximum importance Collaborative Interests of both the parties are given high levels of consideration

    Avoidance One party gives in to all the demands of the other party without putting up its own demands

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