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The environment of marketing channels Week2 Instructor: Jungwan Lee Learning objectives • Understand the impact of environment in a marketing channels context • Delineate the major types of competition in the context of marketing channel structure and strategy • Be alerted to rapid changes in technology and how such changes can affect marketing channels Marketing channel environment • • • • • Economic environment Competitive environment Sociocultural environment Technological environment Legal environment The economic environment • Recession • Channel members-Substantial reductions in sales volume and profitability • Firms-heavy inventories • Inflation=Consumer Price Index(CPI) • Buy now before the price goes higher • Hold on to your money • Deflation • Difficulties to pass cost induced price increases through the channel • Other economic issues • Huge national debt, the trade deficit, the government budget deficit The competitive Environment • Types of competition – Horizontal competition – The same types of firms at the same channel – Intertype competition – Different types of firms at the same channel – Vertical competition – Channel members at the different levels – Channel system competition – Complete channel systems as units: corporate, contractual, administered • Competitive structure – Ex) scrambled merchandising The sociocultural environment • Age patterns of the population – generation Y, N vs. Silver generation • Changing ethnic mix – Minority markets • Educational trends – Higher learning students (12 millions):information, more services • Family or household structure – Smaller families, child-free couples, single • Changing role of women – 80%:30s~40s yrs career oriented women The technological environment • The Internet and electronic marketing channels • Scanners, computerized inventory management, and portable computers – Universal product code (UPC) • Electronic data interchange (EDI) • Teleshopping, computershopping, and home shopping : Net TV • Other technological innovations – Computer salespeople, strategic alliance The legal environment • Legislation affecting marketing channels • Legal issues in channel management – – – – – – Dual distribution: two different channels to his target market Exclusive dealing: only its products Full-line forcing:to carry a broad group of its full line products Price discrimination: books Price maintenance: supplier’s control the prices Resale restriction: to stipulate specific geographical market territories – Tying agreements: not to purchase that product from any other supplier – Vertical integration-”Lock up”: firm owns and operates all levels of distribution channel.
