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CHANNEL ROLES IN A DYNAMIC MARKETPLACE Teacher – Shahed Rahman Subject – Marketing Channel Week – 2 GAUSE’S PRINICIPLE Gause’s Priniciple of Interspecific competition relates to channel roles Two Protozoa Need eight resources to survive Both struggle to survive If resources are limited – both can survive Not enough resources – one have to die CHANNEL RELATIONSHIP MODEL (CRM) It’s a complex environments where channel members operate Channel members must fight to achieve the competitive advantage Competitive Superiority Restrictive Ranges Character Displacement COMPETITIVE SUPERIORITY A Channel member may emerge as a competitive superior It can force rivals to take the exit ‘Survival of the fittest’ RESTRICTIVE RANGES Channel member may differ across distinctive environmental conditions Some prosper in one place while others flourish in different domains Each member recognize its limitation in environments and choose to compete in a different environment Eg. Sears take of themsleves from financial market and focused on retail business CHARACTER DISPLACEMENT Channel members rapidly evolve in diverse ways Taking on different properties to minimize direct competition Each corporate must continuously adapt to dynamic channel environments CHANNEL BEHAVIORS IN COMPETITIVE ENVIRONMENTS Consider Sears, Kmart, Wal-Mart and Radio Shack. There stores overlap in the merchandise they sell, the customers they serve, and the areas where they operate. But to survive, each of there retailers has had to differentiate itself in important ways INTERSPECIFIC COMPETITION IN MARKETING CHANNELS How different business can exist in the same economic community by occupying different niches Each business must set itself apart in some meaningful way to prosper in competitive markets eg. Some follow everyday low pricing Some follow a unique product line CHANGING ENVIRONMENTS: A SHARED CONCERN React while environments are changing to achieve its current position In this process channel member attempt to differentiate itself from other member operating at the same level Eg: Made in USA – Focusing on quality rather than the price by saying its better than the imported goods. CHANNEL ROLES IN EXCHANGE SYSTEM Supplier Relationship Customer Relationship Lateral Relationship SUPPLIER RELATIONSHIP Involve three principal channel roles: Source Producers Sources firms supply raw material Generate components parts, process materials, or finished goods Wholesalers Market products for resale or institutional use It was based on branded products Wholesalers are also performing sales and marketing functions that has been assigned to producers Take physical possession of the goods they market but they not assume ownership WHOLESALERS CLASSIFICATION Wholesaler Classification Take Physical Possession Take Negotiation Title to Function Goods Performed Promotional Function Performed Merchant Wholesaler Yes Yes Yes Yes Manufacturer’s Sales Organization No Yes Yes Yes Agents /Brokers No No Yes Yes Commission Merchants Yes No Yes Yes CUSTOMER RELATIONSHIP Retailers ( Store and Nonstore) Consumers (Individual and Organizational) Department Stores Specialty Stores Convenience Stores Discount Stores Variety Stores Supermarket FOR A BETTER CUSTOMER RELATIONSHIP Increase in the use of electronic shopping Increase in the use of mail order catalog/direct mail More manufacturer’s outlet – it’s a fashion in US economy Hypermarket – one stop mall – self service LATERAL RELATIONSHIP Involve partnership between firms operating at the same channel level Based on cooperation and trust Shared goals and work together to improve design, quality, delivery, promotional or manufacturing Eg- Star Alliance KEY CHANNEL RELATIONSHIPS AND CHANNEL ROLES Channel Relationships Channel Roles Performed withing the Relationship Supplier Relationships Source Producers Wholesalers Customer Relationships Retailers ( Store and nonstore) Consumers (Organizational and Individual ) Lateral Relationship Source ↔ Source Manufacture ↔ Manufacture Wholesaler ↔ Wholesaler Retailer ↔ Retailer ESTABLISHING CHANNEL ROLE IDENTITIES Services Innovation Flexibility Timing DISCUSSION QUESTION Gause’s Principle of Interspecific Competition Compare the role of Wholesalers and Retailers Role Expectation
