Marketing 624

Channels of Distribution Management

Marketing Channel Strategy

Dr. Bert Rosenbloom Professor of Marketing and
Rauth Chair in Electronic Marketing

Channel Strategy

The broad principles by which

the firm expects to achieve its
distribution objectives for its
target market(s)

Six Fundamental Strategic

Distribution Decisions
What role should distribution play in the firms
overall objectives and strategies?
What role should distribution play in the
marketing mix?
How should the firms marketing channels be
designed to achieve its distribution objectives?

Six Fundamental Strategic

Distribution Decisions (Contd)
What kinds of channel members should be
selected to meet the firms distribution
objectives?
How can the marketing channel be managed to
implement the firms channel design effectively
and efficiently?
How can channel member performance be
evaluated?

Channel Design

Those decisions involving the

development of new marketing
channels where none had existed
before, or the modification of
existing channels

Channel Design and

Differential Advantage

The design of the channel should

contribute to the firms quest for
Differential Advantage

Paradigm of the
Channel Design Decision
Recognize need for channel design decision
Set and coordinate distribution objectives
Specify distribution tasks
Develop possible alternative channel structures
Evaluate variables affecting channel structure
Choose the best channel structure
Select the channel members

Channel Design Decision

Phase 1:
Recognize Need for Channel Design
Decision
Obvious examples pp. 200-201 in text
But many times the need to make channel
design decisions is not obvious

Channel Design Decision

Phase 2:
Set & Coordinate Distribution Objectives
Become familiar with objectives of firm

Set explicit distribution objectives

Check for congruency

Channel Design Decision

Phase 3:

Specifying Distribution Tasks

Dont underestimate all of the nuts

and bolts necessary to make
products and services conveniently
available to customers

Channel Design Decision

Phase 4:

Develop Alternative Channel Structures

Number of levels
Intensity at various levels
Types of intermediaries

Channel Design Decision

Phase 5:
Evaluate Variables Affecting channel
Structure
Market variables
Product variables

Company variables
Intermediary variables
Environmental variables
Behavioral variables
Heuristics play an important role

Channel Design Decision

Phase 6:

Choosing the Best Channel Structure

Product-based models (Aspinwall)
Financial Approach
Transaction Cost Analysis Approach

Management Science Approach

Judgmental Heuristic Approach

Channel Design Decision

Phase 7:
Select the Channel Members
Finding perspective channel members
Applying selection criteria
Securing perspective channel members

Target Markets and Channel

Design Strategy

Work backwards from what the

final customers wants. A bottom
up approach.

Framework for Market

Analysis
Market geography

Market size
Market density
Market behavior
when customers buy
where customers buy
how customers buy
who buys

Who Buys?

Who makes physical purchase?

Who uses the product?

Who influences the buying decision?

Channel Management

The administration of existing

channels to secure the cooperation
of channel members in achieving
the firms distribution objectives

Motivating Channel
Members

Find out needs and problems

Offer support consistent with
channel member needs
Provide leadership

Learning About Channel

Members Needs and Problems

Grapevine (informal communications

network)
Inside research
Outside research
Marketing channel audit
Distributor advisory councils

Support for Channel

Members

Cooperative approach
Partnership approach
Distribution programming approach

Product Issues in
Channel Management

New Product Planning and Development

Product Life Cycle

Strategic Product Management

New Product Planning and

Development

Channel member input

Acceptability
Fit with channel member assortments
Education and training
Problems?

Product Life Cycle

What are the channel management
implications during each stage?
Introduction
Growth
Maturity
Saturation
Absolute decline

Strategic Product
Management
Product differentiation
Product

positioning
Product line expansion
and contraction
Trading up and trading
down
Brand strategy
Service strategy

Pricing in Channel
Management
Cost
Market
Competition
Channels

Promotion Through the

Channel
Vs.

Pull versus Push

Promotional Strategy

Classic Push
Promotional Strategies
Cooperative advertising
Promotional allowances
Displays and selling aids
In-store promotions
Contests and incentives
Special promotional deals and merchandise
campaigns

Kinder and Gentler Push

Promotional Strategies

Training
Quotas
Missionary selling
Trade shows