Submitted By: Yash Gaba

Submitted To: D.R S.R Singhvi

Marketing Channels

 Marketing channels develop and operate in a complex environment that is continually

changing.

 Channel managers must therefore have an understanding of the environment and how
it can influence channel management in order to plan effective marketing channel
strategies for meeting these changes successfully.

Major Environment

 Economic environment

 Competitive environment

 Sociocultural environment

 Technological environment

 Legal environment
 Economic Environment

Major economic phenomena:

Recession: 2 consecutive quarters of decline in the Gross Domestic Product (GDP), any
period in which the GDP is stagnant or increasing very slowly is often referred to as
‘recessionary” or at least and “economic slowdown.”

Inflation: Inflation is the rate of increase in prices for goods and services. When the price
level rises, each unit of currency buys fewer goods and services. There are a number of
different measures of inflation in use. The most frequently quoted and most significant ones
are the Consumer Prices Index (CPI) and the Retail Prices Index (RPI).

Deflation: When the overall price level decreases so that inflation rate becomes negative, it
is called deflation. It is the opposite of the often encountered inflation.

Other economic issues:

 Trade deficit
 National debt/ budget deficit
 High interest rate

Competitive Environment

 Types of competition:

 Horizontal competition

 Intertype competition

 Vertical competition

 Channel system competition

 Horizontal competition
Competetion between firms of same type

Intertype competition

Competition between different types of firms at the same channel level.

 Vertical competition

Competition between channel members at different levels in the channel

Channel system competition

Complete channels competing with other complete channels.

 Sociocultural environment

 Age patterns of population

 Changing ethnic mix

 Educational trends

 Family or household structure

 Changing role of women

Technological environment
 Electronic data interchange

Legal environment

Legal issues in channel management

Dual Distribution, or multi-channel distribution: Producer or manufacturer uses 2

or more different channel structures for distributing the same product.

Exclusive Dealing: Supplier requires its channel members to sell only its products or to
refrain from selling directly to competitive suppliers.
Full-Line Forcing: Supplier requires channel members to carry a full line of its products
in
order to sell any products in supplier’s line.

Price Discrimination: Supplier sells at different prices to the same class of channel
members.

Price Maintenance: Supplier dictates prices charged by channel members to their

customers.

Refusal to Deal: Supplier has right to refuse to deal with whomever they want as
channel members.

Resale Restrictions: Manufacturer attempts to stipulate to whom and in what

geographical market channel members may resell the manufacturer’s products.

Tying Agreements: Supplier sells a product to a channel member on condition that the channel
member also
purchase another product

Vertical Integration: Firm owns and operates organizations at other levels of the
distribution channel

Automotive Dealers shutting down because of various factors:

 Real estate Rentals

 Inventory cost
 Manpower
 Marketing cost

Value added by Marketing Channels:

 Transactional Value
 Logistical Value
 Facilitating Value