Colegio de San Gabriel Arcangel

PACUCOA Accredited – Level 1 Status

COLLEGE DEPARTMENT
City of San Jose del Monte,Bulacan

LEARNING ACTIVITY
1
Name : ______________________________ Grade / Score : _______________
Year level : ___________________ Course : _______________
Subject : Distribution Management Date: _3/2/2021____________
Type of Activity (Check or choose from below)
Concept Notes Laboratory Report Formal Theme Others:
Skills: Exercise / Drill Illustration Informal Theme

Activity Title : The Environment of Marketing Channels

Learning Target : I can understand the theory behind The Environment of Marketing
Channels
References : Principles of Marketing/Distribution Management
(Author, Title, Pages) : Medina PhD., Roberto G.; Rosenbloom, Bert

Discussion:

The Marketing Channel and the Environment

The environment consists of myriad external, uncontrollable factors within which marketing
channels exist. To give some order to this huge array of variables, we will categorize them in
this chapter under the following five general headings:

1. The Economic Environment. The economy is probably the most obvious and pervasive
category of environmental variables affecting all members of the marketing channel. In
this section, we discuss several major economic phenomena in terms of their effects on
various parties in the marketing and their implications for channel management.

 Recession. While the official definition of a recession among professional

economists is two 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 as an “economic slowdown.”
  Inflation. Over the past two decades, the rate of inflation as measured by the
Consumer Price Index (CPI) has stayed well below 5 percent. Indeed, many
mainstream economists argue that inflation rates could increase significantly if, for
instance, the economy were to grow too rapidly, if the money supply were loosened
excessively, or if a world crisis were to create energy shortages leading to spiraling
energy prices.

 Deflation. On a wide scale resulting in a decline in prices across a broad spectrum of

goods and services has not occurred in the US since the Great Depression of the
1930s. Deflation, static prices or even very low rates of prices increases can create
serious channel management difficulties.

 Other Economic Issues. Recession, inflation and deflation are not the only variables
in the economic environment. The federal budget deficit, the national debt, and the
trade deficit, which have risen dramatically in recent years, are all continuing
concern as we move into the second decade of the twenty-first century.

2. The Competitive Environment

Competition is always a critical factor to consider for all members of the marketing
channel. This is especially the case in recent years as competition has become global in
scope. No longer is it realistic for domestic firms to focus only on rivals within the
boundaries of their own country.

Types of Competition

Along with the broadened scope of competition and new forms of competition driven by
new technologies, channel managers must also consider the major types of competition
that can affect channel strategy.
 Horizontal competition is competition between firms of the same type. For
example, an automobile manufacturer versus another automobile manufacturer.
 Intertype competition is competition between different types of firms at the same
channel level, such as the off-price store versus the department store or the
merchant wholesaler versus agents and brokers.
 Vertical competition refers to competition between channel members at different
levels in the channel, such as retailer versus wholesaler, wholesaler versus
manufacturer or manufacturer versus retailer.
 Channel system competition refers to complete channels competing with other
complete channels. In order for channels to compete as complete units, they must
be organized, cohesive organizations. Such channels have been referred to as
vertical marketing systems and are classified into three types: 1.) corporate; 2.)
contractual and 3.) administered. In corporate channels, production and marketing
facilities are owned by the same company. In the contractual channel, independent
channel members (producers or manufacturers, wholesalers, and retailers) are
linked by a formal contractual agreement. Administered channel systems result
from strong denomination by one of the channel members, frequently a
manufacturer, over the other members.

Competitive Structure and Channel Management

From the producer’s or manufacturer’s standpoint, an understanding of competitive

structure and the changes taking place in that structure are crucial for successful
channel design and management.
In designing the marketing channel, the channel manager needs to determine which
kinds of distribution and/or dealers can provide the most efficient and effective
distribution of the firm’s products.

The Sociocultural Environment

The sociocultural environment pervades virtually all aspects of a society. Marketing

channels (and particularly the structure of marketing channels) are therefore also
influenced by the sociocultural environment within which they exist. Indeed, some
channel analysts argue that this is a major force affecting channel structure.

Other Sociocultural Forces

In recent years, several sociocultural phenomena have emerged that are not unique
to any particular country or region. Rather, these are forces that already have and
will continue to influence how marketing channels are designed and managed all
over the world. Arguably, the most important of these sociocultural factors in terms
of their relevance to marketing channels are:

1. Globalization – this term is most commonly used to describe the

interconnectedness and interdependencies of countries around the world. In a
business rather than a political context, globalization typically focuses on the
vast and complex trade flows among countries and international supply chains
 that make huge flows of products and services across national boundaries
possible.
2. Mobility and Connectedness – to say that people do a great deal of running
around today, whether for business or personal pursuits, is to state the obvious.
Today’s highly mobile generation expects not only to cover a great deal of
territory on a frequent basis, but to also be completely in touch with colleagues,
friends and family in the process.
3. Social Networking – this term refers to interaction in networks comprised of
individual or organizations that are linked together based on some type of
common interest, such as friendship, beliefs, hobbies, professional pursuits,
special knowledge and many others.
4. The Green Movement – this is a term that has often been used to refer to a
focus on preserving the environment and human health. Much of the attention
has been focused on possible adverse effects on human health and economic
prosperity from such issues as climate change, pollution, chemicals and
hormones in the food chain, the profligate use of resources and a number of
other issues.

The Technological Environment

Technology is the most continuously and rapidly aspect of the environment.

Everyone could probably recite long lists of technological advances that have
occurred in his or her lifetime or even just during the past decade.

While it is not possible to present a comprehensive list of technological

developments impinging on the marketing channel, several are indicative of the
kinds of advancements that should be watched carefully.

Electronic Data Interchange

Electronic data interchange (EDI) refers to the linking together of channel members
information systems to provide real-time responses to communication between
channel members. For example, a retailer’s computerized inventory management
system is connected with and monitored by the supplier’s computers.

Scanners, Computerized Inventory Management, and Handheld Computers

Electronic scanning and computerized inventory management, enhanced by

portable computers, cellular phone technology and the Internet, have created a new
world in retailing and wholesaling.
The Digital Revolution and Smartphones

The digital revolution is the term commonly used to describe the huge
transformation that has taken place over the past three decades from analog and
mechanical technology to digital technology. It is a revolution that is still continuing
today.

RFID

This acronym stands for radio frequency identification. This is a relatively new
technology that uses a device called an RFID tag attached to a person or object, such
as product, that enables that person or product to be identified and tracked using
radio waves.

Cloud Computing

Cloud computing is an Internet-based technology that enables both large and small
businesses and organizations to utilize highly sophisticated computer applications
without having to have their own hardware, software, office computing space and
staff. Instead, by being part of the network, or “cloud”, the user can access the
computing capabilities needed on demand from a third-party provider via the
Internet.

Activity#2 for Midterm

1. How does the impact of the environment on channel strategy differ from other
major strategy areas of the marketing mix?
2. In dealing with the effects of environment on channel strategy, the channel
manager has a lot more to think about. Discuss this statement.
3. Discuss the fundamental channel management issues associated with
recessionary, inflationary and deflationary periods in the economy.
Activity #2: Essay type

1. Describe the distribution tasks that wholesalers are especially well suited for performing.
2. Describe the distribution tasks that retailers are especially well suited for performing.
3. Discuss retailers’ growing power in the marketing channel in terms of the possible implications for
channel management.
Activity#1: Essay, answer it on your own understanding.
 Colegio de San Gabriel Arcangel
PACUCOA Accredited – Level 1 Status
COLLEGE DEPARTMENT
City of San Jose del Monte,Bulacan

LEARNING ACTIVITY
2
Name : ______________________________ Grade / Score : _______________
Year Level : ___________________ Course : _______________
Subject : Date : ________________
Type of Activity (Check or choose from below)
Concept Notes Laboratory Report Formal Theme Others:
Skills: Exercise / Drill Illustration Informal Theme ____________

Activity Title :
Learning Target :
References :
(Author, Title, Pages) : Medina PhD., Roberto G.
Discussion:

COMPILATION OF
LEARNING ACTIVITY
SHEET in human behavior in
organizations

PREPARED BY:
Prof. Edelita g. Lazaro