Chapter 8

Destor, Juliza
Cordero, Cryzler
Ervin, Gibo
Irasga, Harvey
Target Markets & Channel Design Strategy

Channel manager decisions regarding the design of the firms marketing channel.

· MUST be a function of the firms target markets needs and wants

· Remember customer value is the driver of design.

Framework for Market Analysis

The Four Market Size Dimensions of All Market

1. Market Geography
2. Market size
3. Market density
4. Market Behavior

Market Geography

· Refers to the geographical extent of markets and where they are located.

Channel Managers Task

· To evaluate market geography relative to channel structure to ensure that the structure
is able to serve the markets effectively and efficiently.
Locating Markets

Channel managers ascertain the geographical locations of target markets through the use
of:

· The Bureau of Census

Regions, States, counties, MSAs (x > 50k*), secondary markets (x < 50k)*, etc.

· Postal Zip Codes

· GIS

Computerized systems that combine physical geography with cultural geography

(Dunne, Lusch, & Carver 2010)

Tracking Changes in Market Geography

In the U.S.

A high degree of mobility means markets change frequently.

Globally

Southeast Asian countries & former Eastern Bloc countries of Europe have become key
locations.

Market Size

Refers to the number of buyers or potential buyers in a given market

Can be either end-users or industrial buyers

Channel Managers Task

When using Bucklins model for market size data, it is important to consider the particulars
of certain situations
For Example:

Will an increase in buyers increase or decrease average cost of serving customers?If an increase
in average cost is likely, can channel structure be changed to reduce costs before market
reaches its increased size?

Market Density

Refers to the number of buyers or potential buyers per unit of geographical area.

Efficient Congestion

Congested, high-density, markets can promote efficiency in the performance of several basic
distribution tasks (e.g., transportation, storage, communication, and negotiation.)

Strategic Implication of Density

· Density offers efficiency

Opportunity to achieve high levels of customer contact at lower average costs

· Manufacturers often seek out intermediaries (wholesalers & retailers) operating in

dense markets

Market Behavior
Market Behavior is characterized by, or encompasses

1. When the market buys

2. Where the market buys
3. How the market buys, and
4. Who buys

When the Market Buys

Buying Patterns Implications

-Seasonal - Variance creates peaks and valleys in production

-Weekly - Should seek members who are in tune with changes in patterns

-Daily - How could a Category Killer help the manufacturer?

Where the Market Buys

A Function of:

The types of intermediaries from which buyers make a purchase

Implications

Particular types of products are typically purchased where?

What product categories align well with ones product(s)?

A function of:

The location of these intermediaries

Implications

Are these patterns likely to change?

How the Market Buys

➢ Large vs. Small Quantities?

➢ Self-Serve vs. Assisted Shopping?
➢ One-Stop vs. Multi-Store Shopping?
➢ Impulse vs. Planned Purchases?
➢ Cash vs. Credit?
➢ Shop at home vs. Prefer Traditional Store?
➢ Shopping vs. Non-Shopping Good

Who Buys
Who makes the actual purchase?

➢ Affects type of retailer chosen

➢ May alter channel members for industrial goods

Who decides whether to purchase?

Who in family unit

Buying centers for industrial goods

Buying Centers

A set of people who participate in industrial buying decisions & who are responsible for the
consequences resulting from those decisions.

Typical Participants (or Roles Performed):

➢ Users
➢ Influencers
➢ Deciders
➢ Approvers
➢ Buyers
➢ Gatekeepers

Note: Individuals may perform more than one.

Changes in Market Behavior

· Channel Managers must be attune to:

1. Changes likely to occur in the targeted markets shopping behavior.

2. Whether these changes are likely to remain (i.e., permanent) or are more likely fleeting
(i.e., short-term).
Implications of Changes in Market Behavior

· Increased demand for

➢ Knowledgeable & helpful sales assistance:

Increase in personal selling in department/specialty stores

➢ Minimum service with very low prices

Increase in retailers w/ sparse surroundings & aesthetics

➢ Convenience & no crowds of shoppers

Increase in firms offering mail order & catalog services to avoid crowds & shop from
home

➢ Efficiency in information gathering & purchasing

Increase in Internet shopping, especially for B2B

➢ Innovation in service, selection, or effectiveness

Department stores featuring different layouts, kiosks, and specialty stores

adopting fast turn (e.g., Zara)*