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15
Designing and Managing
Integrated
Marketing Channels
Marketing Management, 13th ed
Chapter Questions
• What is a marketing channel system and
value network?
• What work do marketing channels perform?
• How should channels be designed?
• What decisions do companies face in
managing their channels?
• How should companies integrate channels
and manage channel conflict?
• What are the key issues with e-commerce?
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Philips Emphasizes Value Delivery
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What is a Marketing Channel?
A marketing channel system is the
particular set of interdependent
organizations involved in the process of
making a product or service available
for use or consumption.
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Channels and
Marketing Decisions
• A push strategy uses the manufacturer’s
sales force, trade promotion money, and
other means to induce intermediaries to
carry, promote, and sell the product to end
users.
• A pull strategy uses advertising, promotion,
and other forms of communication to
persuade consumers to demand the product
from intermediaries.
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Aldi Adjusted Its Strategy
for the U.S. Market
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Buyer Expectations for
Channel Integration
• Ability to order a product
online and pick it up at a
convenient retail location
• Ability to return an onlineordered product to a
nearby store
• Right to receive discounts
based on total online and
offline purchases
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Categories of Buyers
Habitual shoppers
High value deal seekers
Variety-loving shoppers
High-involvement shoppers
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Types of Shoppers
• Service/quality customers
• Price/value customers
• Affinity customers
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Channel Member 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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Figure 15.2 Marketing Channel Flows
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Figure 15.3
Consumer Marketing Channels
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Figure 15.3
Industrial Marketing Channels
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Designing a
Marketing Channel System
Analyze customer needs
Establish channel objectives
Identify major channel alternatives
Evaluate major channel alternatives
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Channel Service Outputs
Lot size
Waiting/delivery time
Spatial convenience
Product variety
Service backup
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Identifying Channel Alternatives
Types of
intermediaries
Number of
intermediaries
Terms and
responsibilities
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Number of Intermediaries
Exclusive
Selective
Intensive
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Terms and Responsibilities
of Channel Members
•
•
•
•
Price policy
Condition of sale
Distributors’ territorial rights
Mutual services and responsibilities
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Figure 15.4 The Value-Adds vs. Costs
of Different Channels
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Figure 15.5 Break-Even Chart for the
Choice Between a Company Sales Force
and Manufacturer’s Sales Agency
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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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Channel Power
•
•
•
•
•
Coercive
Reward
Legitimate
Expert
Referent
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Channel Integration and Systems
Vertical marketing
systems
• Corporate VMS
• Administered VMS
• Contractual VMS
Horizontal
marketing systems
Multichannel
systems
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What is Channel Conflict?
• Channel conflict occurs when one
member’s actions prevent another
channel from achieving its goal.
• Types of channel conflict
• Vertical
• Horizontal
• Multichannel
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Causes of Channel Conflict
Goal incompatibility
Unclear roles and rights
Differences in perception
Intermediaries’ dependence
on the manufacturer
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Table 15.3 Strategies for Managing
Channel Conflict
• Adoption of
superordinate goals
• Exchange of
employees
• Joint membership in
trade associations
•
•
•
•
•
Cooptation
Diplomacy
Mediation
Arbitration
Legal recourse
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Coach Avoids Brand Dilution
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e-Commerce Marketing Practices
• Pure-click
• Brick-and-click
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Marketing Debate
 Does it matter where you are sold?
Take a position:
1. Channel images do not really affect
the brand images of the products they
they sell that much.
or
2. Channel images must be consistent with
the brand image.
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Marketing Discussion
 Think of your favorite retailers.
 How have they integrated their
channel system?
 How would you like their channels to
be integrated?
 Do you use multiple channels from
them? Why?
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