30-Nov-17

Chapter
17
Designing
And Managing
Integrated
Marketing
Channels

Copyright © 2016 Pearson Education Ltd. 17-1

Learning Objectives

1. What is a marketing channel system and value

network?
2. What work do marketing channels perform?
3. How should channels be designed?
4. What decisions do companies face in managing
their channels?
5. How should companies integrate channels?

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Learning Objectives

6. What are the key channel issues in e-

commerce?
7. What are the key channel issues in m-
commerce?
8. How should companies manage channel
conflict?

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Marketing Channels
and Value Networks
• Marketing channels
– Sets of interdependent
organizations participating
in the process of making a
product or service
available for use or
consumption
– Intermediaries:
merchants, agents, and
facilitators
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Marketing Channels
and Value Networks
• A marketing channel system
– The particular set of marketing channels a
firm employs
– Push vs. pull strategy

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Marketing Channels
and Value Networks
• Multichannel marketing
– Using two or more
marketing channels to
reach customer segments
in one market area
– Omnichannel marketing
– Integrated marketing
channel system

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Figure 17.1
The Hybrid Grid

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Marketing Channels
and Value Networks
• Value network
– A system of partnerships and alliances that a
firm creates to source, augment, and deliver
its offerings
– Demand chain planning

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Marketing Channels
and Value Networks
• The digital channels
revolution
– Customer support in
store/online/phone
– Check online for product
availability at local stores
– Order product online to
pick up at store
– Return a product
purchased online to a
nearby store
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The Role of
Marketing Channels
• Channel functions and flows

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Figure 17.2
Marketing Flows For Forklift Trucks

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The Role of
Marketing Channels
• Channel levels
– Zero-level channel
(direct)
– One/two/three-level
channels
(intermediaries)
– Reverse-flow channels
• Service sector channels

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Figure 17.3
Consumer/Industrial Marketing
Channels

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Channel-Design Decisions
• Analyzing customer needs and wants

 Desired lot size

 Waiting and delivery time
 Spatial convenience
 Product variety
 Service backup

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Channel-Design Decisions
• Establishing objectives and constraints

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Channel-Design Decisions
• Identifying major channel alternatives

Types of intermediaries

Number of intermediaries

Terms/responsibilities of
channel members

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Identifying major channel

alternatives
• Number of
intermediaries
– Exclusive
distribution
– Selective
distribution
– Intensive
distribution

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Identifying Major Channel

Alternatives
• Terms and responsibilities of channel
members

 Price policy
 Conditions of sale
 Distributors’ territorial rights
 Mutual services and responsibilities

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Channel-Design Decisions
• Evaluating major channel alternatives
– Economic criteria
– Control and adaptive criteria

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Figure 17.5
Break-Even For Sales Force
vs. Sales Agency

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Channel-Management
Decisions
Selecting Training
channel channel
members members

Evaluating
Global channel channel
considerations members

Channel Modifying
modification channel
decisions design

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Training and Motivating Channel

Members
• Channel power

Coercive

Reward

Legitimate

Expert

Referent
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Training and Motivating Channel

Members
• Channel partnerships
and ECR practices
– Demand-side
management
– Supply-side
management
– Enablers and
integrators

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Channel Integration and

Systems
• Conventional
marketing channel
• Vertical marketing
systems
• Horizontal
marketing systems

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Vertical
Marketing Systems
• Corporate VMS
• Administered VMS
• Contractual VMS
– Wholesaler-sponsored voluntary chains
– Retailer cooperatives
– Franchise organizations
• New competition in retailing

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E-Commerce
Marketing Practices
• E-commerce
– Uses a Web site to transact or facilitate the
sale of products and services online
• Pure-click vs. brick-and-click companies

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M-Commerce
Marketing Practices
• Mobile channels and media can keep
consumers as connected and interacting
with a brand as they choose
– Advertising and promotion
– Geofencing
• Privacy issues

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Conflict, Cooperation,
and Competition
• Channel conflict
– Generated when one channel member’s
actions prevent another channel member from
achieving its goal
• Channel coordination
– Occurs when channel members are brought
together to advance the goals of the channel
instead of their own potentially incompatible
goals

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Conflict, Cooperation,
and Competition
• Types of conflict and competition

Horizontal channel conflict

Vertical channel conflict

Multichannel conflict

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Conflict, Cooperation,
and Competition
• Causes of channel conflict

 Goal incompatibility
 Unclear roles and rights
 Differences in perception
 Intermediaries’ dependence on
manufacturer

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Conflict, Cooperation,
and Competition

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Conflict, Cooperation,
and Competition
• Dilution and cannibalization
– Marketers must be careful not to dilute their
brands through inappropriate channels
• Legal and ethical issues in channel
relations
– Exclusive dealing/territories, tying
agreements, and dealers’ rights

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