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DAVAO CENTRAL COLLEGE, INC.
Juan dela Cruz Street, Toril, Davao City

Landline No. (082) 291 1882
Accredited by ACSCU-ACI
PMM5
DISTRIBUTION
MANAGEMENT
LEARNING MODULE
SY 2023 - 2024
Prepared by:Ramil Fernando s. Brucal,MBA, MM(c.a.r)
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Course Name: Distribution Management
Course Description:
The course covers the principles and functions of
distribution management, the roles of marketing channels and
physical distribution in the marketing system, the cost
implications of management decisions involving distribution.
The course aims to crystallize student’s understanding of
distribution cost analysis through their involvement in
exercises and actual projects in the area of distribution
management.
Pre-requisite: Marketing 1
Units: 3
Course Outline:
PRELIM
Unit 1: Overview of Distribution Management and the
Marketing Channels
Unit Requirements: A written case study on distribution
management
Week 1Requirements: Essay
Week 2 Requirements: Journal critique
Week 3Requirements: Case Study
PRE-MIDTERM
Unit 2: The Behavioural Process and Development of Marketing
Channel
Unit Requirements: Written Case Study

Week 5Requirements: Reflection paper
Week 6Requirements: Case Analysis
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MIDTERM
Unit 3: Managing the Marketing Channels (Part 1)
Unit Requirements: Journal Critique
Week 7 Requirements: Essay
Week 9 Requirements: Journal Critique
PRE-SEMI FINALS
Unit 4: Managing the Marketing Channels (Part 2)
Unit Requirements: Reflection paper and journal critique
Week 12Requirements: Journal critique
SEMI FINALS
Unit 5: Other Perspectives on Marketing Channels
Unit Requirements: Reflection paper and journal critique
Week 13 Requirements: Essay
Week 15Requirements: Journal critique
FINALS
Unit 6: Marketing Channel for Services and Distribution Plan
Unit Requirements: Distribution Plan
Week 17Requirements: Distribution plan
Week 18 Requirements: Distribution plan presentation
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Week 1

Marketing Channels
Topic: Definition of distribution management and

distributor
Factors influencing distribution management
Successful distribution management
Learning Outcomes:
1. Define distribution management and distributor
2. Identify and explain the factors influencing
distribution management
3. Discuss successful distribution management
Concept Digest (Discussion)
One overriding implication to distribution management in

this era of a very strong global competition is that
”Customers now expect for more and better channel choices
for gaining access in the vast array of products and
services from all over the planet- how, where, and when they
want them (Rosenbloom, 2007).”
Definition of Distribution Management

Distribution management refers to the process of
overseeing the movement of goods from the supplier or
manufacturer to the point of sale. It is an overarching
term that refers to the numerous activities and
processes such as packaging, inventory, warehousing,
supply chain and logistics. It is the most important
part of the business cycle for distributors and
wholesalers. The profit margins of the businesses
depend on how they can turn over their good. The more
they sell, the more they earn, which means a better
future for the businesses. Having a successful
distribution management system is also very important
for businesses to remain competitive and to keep the
customers satisfied (prudencesoftech.com, 2019)
Distribution management is an integral part of
logistics. It includes forecasting, transportation,
warehousing, and delivery within the larger universe of
logistics and supply chain management. While
continually facing a spectrum of variables in their
daily business, distribution managers are charged with
resolving the three fundamental questions: When, Where,
and How Much? Successful distribution management
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utilizes: state of the art information systems,

logistics software, highly efficient equipment,
forecasting tools, warehouse inventory management,, and
excellent safety and training programs (BRWilliams.com,
2020).
Definition of Distributor
Distributor (Marketing Channels)- is a “business that
does not manufacture its own products but purchases and
resell these product (APICS Dictionary, 1998). It can
apply to enterprises ranging from various forms of
stock jobbers, importers, cooperative buying
associations, and drop shippers to manufacture
distributors, brokers, and commission merchants (Ross,
2004)
Factors Influencing Distribution Management

There are six (6) top factors that influences
distribution management (brwilliams.com, 2020)
Customer perspective. The ideal situation for any
retailer or manufacturer is to have just enough
inventory on hand to sell or to keep production lines
running smoothly. These customers wish to hold as
little stocks as possible without running out. One
reason for this perspective of the customer is to got
hold of their cash as much as possible since over
inventory make their money sleep in their warehouses.
Therefore, clients/customers require several different
items, each sold or used at a different pace
forecasting the product mix becomes an integral part of
their equation. Additional variables such as sales
promotions at the retailer or seasonal inventory build
by the manufacturer, can make forecasting difficult.
Distributor perspective. The perfect circumstance for

distribution management is to have all fully loaded
trucks operating on regularly scheduled routes 100
percent of the time with a 100 percent safety record.
However, this is hard to achieve since customer sales
flow in and flow out in real life. An effective
distribution and warehousing company strives to
maintain the optimal inventory with their suppliers to
keep inventory management costs a reasonable level
without excessive safety stock.
Communication. Running out of a product or component

parts is the customer’s most nightmare. Distribution
management must ensure the proper flow of information,
forecasting, and accurate, safe, and timely deliveries
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are provided. Distributors are provided real time sales

information electronically without traditional
ordering. This type of transparency allows each link in
the supply chain and to adjust their stock level and
arrange deliveries accordingly. Customers, on the other
hand, must also provide ongoing demand forecast of
their products. Therefore, open and continuous
communication with the customer will help the
distributor to anticipate inventory replenishment,
schedule equipment and staff for delivery.
Planning and Measuring: Creating a Culture. The first

step in preparation is to develop a customer-focused
mission and company culture that blends the importance
of customer satisfaction with realties of business
profitability. Measuring every element of business,
from forecasting, procurement, inbound freight
management, warehousing and inventory control to order
processing, load consolidation, delivery scheduling and
backhauls, is necessary. Key considerations are cycle
time, cost analysis, on-time deliveries, accurate order
fulfilment, and safety measurements.
Training and Commitment. Training employees to execute

the needs of a distribution company is more than
explaining and showing “how” to perform a function.
Underlying successful performance is a result of
individual’s understanding “why” a job needs to be done
right and the potential ramifications of poor
performance to the company’s future. The key for
superior distribution management is to help new staff
become familiar with all aspects of the job to be able
to make wise and independent decisions in the future.
Implementing the Right Tools: Warehousing and

Distribution. Inventory management and warehouse
management system software can be used to help optimize
space within a warehouse. By maximizing spce, companies
can forestall expensive expansion and create more
efficient inventory placement. Also, with the loading
and routing software, distributors can optimize
vehicles and lower down cost. These tools incorporate
load quantities and target arrival times with distance
and drive time. Optimizing the fleet is a substantial
cost driver for a successful distribution management
company
Successful Distribution Management

Putting all variables together, making informed
decisions, and striving to improve performance each day
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is the key to a successful distribution management.

Complacency has led to the death of many logistics
companies, while innovation has created today’s
leaders. Reliability, anticipation, responsiveness,
safety, and high efficiency are the attributes of a
quality successful distribution management company (BR
Williams, 2020)
Activities (Formative)
Title: One Minute papers
Things to do:
1. A “one minute papers” activity will be done at the end
of the week. Students will be asked to write one-minute
papers. The papers must address a brief- but important-
question about the lesson to assess student’s
understanding
Assessment (Summative)
Title: Essay question
Date of Submission:
Rubric Used: Rubrics for Essay questions
Things to do:
1. Students will be asked to answer the following
questions on distribution management and marketing
channels at the end of the week
1.1 What is distribution management and its importance
to a marketing organization?
1.2 Discuss briefly the channel marketing structure
and its participants
1.3 As a future channel manager, what do you think is
the long-range essence of having a good
disgtribution management to your organization and
customer?
Reference
BR Williams, (2020). “The Top 6 Factors That Influence

Distribution Management Strategy. Retrieved May 20,
2020 from http://www.brwilliams.com
Etter, L. (2010). “Food for Thought, Do you need Farmer’s
Market.” Wall Street Journal
Prudence (2019), “What is Distribution Management?”
Retrieved July 2, 2020 from
https://prudencesoftech.com/what-is-distribution-
management/
Ross, D. F. (2004). Components of Distribution Management.

IN: Distribution Planning and Control. Chapman & Hall
Materials Management/ Logistics Series. Springer,
Boston, MA
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Week 2

Marketing Channels
Topic: The Marketing Channel

The Flows in Marketing Channel
The Channel Structure
The Channel Participants
The Facilitating Agencies
Learning Outcomes:
1. Discuss the concept of marketing channels
2. Explain the flows in the marketing channels
3. Describe the channel structure
4. Identify the channel participants
5. Describe the facilitating agencies
The Marketing Channel Defined
Marketing channel is defined as the external

contractual organization that management operates to
achieve its distribution objectives (Rosenbloom, 2016).
There are four terms in this definition that should be
given emphasis namely: external, contractual
organization, operates, and distribution objectives.
 The term external means that marketing channel exists
outside the firm and therefore, is not part of a firm’s
internal organization structure. Management of the
marketing channel therefore involves in the use of
managing more than one firm (inter-organizational
management) rather than managing one firm (intra-
organizational management).
 The term contractual organization refers to those

firm or parties who are involved in negotiatory
functions as a product or service moves from the
producer to its final user. Negotiatory function
includes buying, selling, and transferring title to
products or services. Consequently, only these
firms or parties that engage in these functions are
members of the marketing channel (Bahn, 1988). It
leads to contactual efficiency is the level of
negotiation effort between sellers and buyer
relative achieving a distribution objectives. It is
the relationship between an input(negotiation
effort) and an output (the distribution objective
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 The third term operates suggests involvement by

management in the affairs of the channel. This
involvement may range from the initial development
of channel structure all the way to day-to-day
management of the channel. When management operates
the external contractual organization, it has made
a decision not to let this organization run by
itself. This does not mean that management can have
total or even substantial control of the channel.
On the other hand, by operating the channel,
management is acting to avoid unwitting control of
its actions by the channel (Frazier and Rody, 1991;
Rosenbloom,2016).
 Lastly, the fourth term is distribution objectives,

means that the management has certain distribution
goals in mind. The marketing channel exists as a
means for reaching those goals. The structure and
the management of the marketing channels are thus,
a part in the function of the firm’s distribution
objectives. As this objectives change, variations
in the external contractual organization and the
way management attempt to operate it can also be
expected to change (Scheck, J.,2009)
The Channel Manager. The term channel manager refers to

anyone in a firm or organization who is involved in
marketing channel decision-making. It refers to a
person in an organization whose main function is to
make channel decisions for the organization.
The Flows in Marketing Channel

A series of flow appears when a marketing channel has
been developed. These flows provide the link that
connects channel members and other agencies together in
the distribution of goods and services (Etter, 2010).
These flows are: product flow, negotiation flow,
ownership flow, information flow, and promotion flow.
 Product flow. The product flow refers to the
actual physical movement of the product from the
manufacturer through all of the parties who take
physical possession of the product, from its point
of production to final consumers. Take an example
of a soft-drink manufacturer wherein the product
comes from its softdrinks and packaging plants in
a specific place in the country. From the plant
the finished products are transported either by
their own company tracks or common carrier
(transportation company) to softdrinks
distributors (wholesalers), who in turn shop or
transport the products using their own delivery
trucks to retail and sari sari stores,
supermarkets, groceries, convenience stores,
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restaurants and other retail outlets, where it is

finally bought by the consumers.
 Negotiation flow. The negotiation flow represents

the interplay of the buying and selling functions
associated with the transfer of title (right of
ownership) the softdrink products. It is to be
noted that transportation firm excluded in this
flow since it does not participate in the
negotiatory functions. It should also be noted
that negotiation involve a mutual exchange between
buyers and sellers at all levels of the channels.
 Ownership flow. The ownership floe shows the

movement of the title to the product as it is
passed from the manufacturer to the final
consumers. Transportation firm also is excluded in
this flow just like in the negotiations flow. This
is because transportation firm does not take the
title to the product nor is it actively involved
in facilitating the product but it is only
involved in the transportation of the physical
product itself.
 Information flow. The information flow involves

the participation of all parties including the
transportation firm in the exchange of
information, and the flow can either going up or
down. Example, The softdrink company may get
information from the the transportation firm about
its shipping schedules and rates, and the
transportation company in return seeks information
from the softdrink company about the delivery
schedules as to whom it would be delivered and
where.
 Promotion flow. The promotion flow refers to the

convincing information in the form of advertising,
personal selling, sales promotion and publicity.
In this flow, advertising agency is included since
it is actively involved in the flow being actively
involved in the providing and maintaining the
promotion flow, specifically in the advertising
aspects of promotions. It means that the
manufacturer and the advertising agency closely
work hand in hand to develop promotional
strategies
The Channel Structure

Channel structure is defined as the group of channel
members to which a set of distribution tasks has been
allocated. This definition suggests that in developing
channel structure, the channel manager is faced with an
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allocation decision which is a given set of

distribution tasks that must be performed to accomplish
a firm’s distribution objectives. The structure of the
channel therefore, reflects the manner in which the
channel manager has allocated these tasks among the
members of the channel. Example, M W R
C this channel structure means that the channel manager
the tasks to his own firm as well as to wholesalers,
retailers, and the consumers. Multi-channel strategy
has been used as a trend in recent times and this means
that the firm has chosen to reach its customers using
more than one channel which results to multi-channel
structure
The Ancillary Structure

The ancillary structure is a group of institutions or
facilitating agencies that assists channel members in
performing distribution tasks. The basic function of
the channel manager in creating ancillary task is the
same as in developing channel structure which means
that he must try to allocate distribution tasks to
those parties best suited in performing them. However
this function is less complex that those encountered in
developing and managing channel structures because
facilitating firms do not play a part in the channel
decisions that ultimately control the distribution of
goods and services to their target markets but only
they provide services to the channel members after the
basic channel decisions have already been made.
The Channel Participants

The channel participants are those participant members
of the channel market who perform negotiatory functions
such as buying, selling and transferring of title or
ownership which include: producers and manufacturers,
intermediaries, and final users.
1. Producers and manufacturers. They consist of firms
that are involved in extracting, growing, or making
products. This category includes those belonging in
the agriculture, forestry, fishing, mining,
construction, manufacturing, and some service
industries.
2. Intermediaries. Intermediaries or middlemen are

independent businesses that assist producers and
manufacturers (and final users) in the performance
of negotiatory functions and other distribution
tasks. They participate in the negotiation and or
ownership flows and operate at two basic levels:
wholesale and retail.
The Wholesale Intermediaries

They consist of business that are engaged in selling
goods for resale or business use to retail,
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industrial, commercial, institutional, professional,

or agricultural firms as well as to other
wholesalers. Also included are firms acting as
agents or brokers in either buying goods for or
selling them to such customers (as cited by
Rosenbloom, 2016). Wholesalers can be categorized
into three major types: merchant wholesalers, agent,
brokers, and commission merchants, and
manufacturer’s sales branches and offices.
 Merchant wholesalers are those firms who are
primarily engaged in buying, taking title to,
usually storing and physically handling
products in relatively large quantities and
resell these products in smaller quantities to
retailers, other wholesalers, and to other
industrial, commercial or institutional
concerns. They can also be called as jobber,
distributor, industrial distributor, supply
house assembler, and many others. Distribution
tasks of merchant wholesalers include:
providing market coverage, making sales
contacts, holding inventory, processing orders,
gathering market information, and offering
customer support
 Agents, brokers, and commission merchants are
independent middlemen who do not take title
(ownership) to the goods in which they deal but
they are actively involved in the negotiatory
functions of buying and selling while acting in
behalf of their clients. They are usually paid
in the form of commission on sales or purchase.
 Manufacturer’s sales branches and offices are

owned and operated by the manufacturers but are
physically separated from manufacturing plants.
They are used primarily for the purpose of
distributing the manufacturers own products at
wholesale
The Retail Intermediaries

The retail intermediaries are composed of business
firms engaged primarily in selling merchandise for
personal or household consumption and rendering
services related to the sale of goods. The power
and influence of retailers in marketing channels
have been growing and has lead to these major
developments: 1) increase in size and buying
power- The increase in size and buying power of
many retailers is due to growth as well as to
mergers, acquisitions and buyouts. Size translate
into power, as retailers become larger, their
capacity to influence the actions of other channel
members (wholesalers and manufacturers) also
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becomes greater; 2) application of advanced

technologies- retailers became active followers of
many new technologies that have been made them
more sophisticated and demanding channel members ,
and 3) use of marketing strategies- retailers have
traditionally been more supplier (vendor) driven
than market-driven. However, in recent years, more
retailers are discovering the power of modern
marketing methods for surviving and prospering in
stiff competitive retail markets. Retailers around
the world, therefore, have become much larger and
more concentrated, more technologically adept, and
more sophisticated marketers acting as gatekeepers
into consumer’s market (Rosenbloom & Mollenkopf,
1993; Rosenbloom, 2016).
3. Final users. The final users include those consumer

and industrial users. Consumer users include
households who engaged in buying consumer products
for personal consumption. Industrial users include
industrial buyers who engaged in buying industrial
products for further processing or for use in
conducting a business.
Facilitating Agencies
Facilitating agencies are business firms that assist in
the performance of distribution tasks other than
buying, selling and transferring title. They may be
viewed as subcontractors to whom various distribution
tasks can be farmed out based on the principle of
specialization and division of labor (Rosenbloom,
2016). The common types of facilitating agencies are:
 Transportation agencies which include all firms
offering transportation services on a public basis
like the Bureau of Post
 Storage agencies which consist of public
warehouses that specializes in the storage of
goods on a fee basis
 Order processing agencies are those firms which
specialize in order fulfilment tasks
 Third party logistics are firms that specialize in
providing logistics services to companies or
organizations that are not capable or who find it
more convenient and efficient to let an outside
firm perform most or all of the distribution tasks
involved in the supply chain management.
 Advertising agencies are firms which offer the
channel member expertise in developing promotion
strategy
 Financial agencies consist of firms such as banks,
and finance companies that specialize in
discounting accounts receivable
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 Insurance companies are firms which provide the

channel manager with the means for shifting some
of the risks inherent in any business venture.
 Marketing research firms which provides marketing
research services and information relevant to
distribution
Title: Exit Ticket: 3-2-1 activity
Things to do:
1. Title: An “Exit Ticket: 3 – 2 - 1” activity will be
done at the end of the week. Students will be asked to
write an exit ticket, having them reflect on the
content from lessons discussed to determine how well
they processed and retained the lessons
2. Write your answers on the worksheet provided for this
activity
Title: journal critique
Date of Submission:
Rubric Used: Rubrics for Journal Critique
Things to do:
1. Students will be asked make a journal critique on a
given article at the end of the week

activity
Article
Add another Middleman to the Channel and Things Will

Really Get Moving- Like a Gazelle
You would think that adding another level of middlemen to a

channel of distribution would slow things down. Wouldn’t
products have to go through another “step” if an additional
intermediary was added? Wouldn’t this be bound to make the
channel less efficient?
Well, just the opposite seems to be occurring in online
channels of distribution for used electronic products based
on the experience of Gazelle.com, a relative newcomer
(founded in 2006), but already a major player in re-commerce
(channels). Gazelle is a middleman that serves as an online
specialty merchant wholesaler in re-commerce channels. But
unlike e-Bay and other numerous other online intermediaries,
Gazelle actually buys, takes title to and physically holds
used electronic goods. It obtains the use of iPods, laptops,
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cell phones, cameras, stereo speakers and other equipment

from consumers who are looking to get rid of this stuff but
don’t want to go through the trouble of pursuing these items
on eBay, Amazon, or other sites that have become more
complicated to use in recent years. Instead, Gazelle pays
for used electronics upfront regardless of whether the goods
end up selling. After a customer agrees to sell a product to
Gazelle, the customer is provided with a free shipping label
and packing material to mail it to Gazelle’s fulfilment
center in Boston, where the products are held in a
warehouse. The used equipment is then photographed and
listed in marketplaces such as eBay and Amazon, sold to
wholesalers for global export or, in some cases, recycled.
Gazelle’s system really gets things moving, according to
Gazelle spokesperson, Kristina Kennedy, who claims, “our
(Gazelle’s) biggest competitor is inertia.” She’s right,
because in fact, only a tiny fraction of the $300 billion in
use electronic equipment estimated to be in consumer’s homes
is sold via online channels each year simply because
millions of consumers just don’t want to bother with selling
online by themselves. But take away all of that hassle, as
online intermediary, Gazelle promises to do, and a lot more
of that $300 billion of used electronic equipment will get
moving as fast as well, a Gazelle
Source: Based on Geoffrey A Fowler. “Niche Sites Going After e-Bay,“

Wall Street Journal, December 9, 2009: B4
References:
Bahn, K., 1988). Developments in Marketing Science. Academy

of Marketing Science pp. 460 – 64
Frazier, G., and Rody, R.,(1991). The Use of Influence

Strategies in Inter Firm Relationships in Industrial
Product Channels.” Journal of Marketing pp. 52 – 69
Rosenbloom, B, (2016). Distribution Management. Cengage
Learning Asia Pte Ltd., Singapore
Scheck, J., (2009). HP Plans to Fuse Printer , PC Units.
Wall Street Journal B1
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Week 3

Marketing Channels
Topic: The Marketing Channel and the Environment
Learning Outcomes:
1. Identify and described the environmental factors in
the marketing channel
The Marketing Channel and the Environment

The environment consists of several external
uncontrollable factors within which marketing channels
exist. These environmental factors include: the
economic environment, the competitive environment, the
socio-cultural environment, the technological
environment, and the legal environment.
1. The economic environment. The economic factors are
a critical determinant of channel member behaviour
and performance. The channel manager therefore must
be aware of the influence of economic variables on
the participants in the channels of distribution.
These economic factors involved recession,
inflation, deflation and other economic factors
such as budget deficit, high interest rates and
foreign exchange rates
 Recession is an economic situation where there

is two consecutive quarters of decline in the
Gross Domestic product (GDP) and any period in
which the GDP is stagnant or increasing very
slowly is often called as “recessionary” or
economic slowdown. As recessionary period
develop, consumer spending, specially on
durable goods such as appliances which
consumers can postpone purchasing, usually
slows down. Changing consumer buying behaviour
brought on by the recession has a significant
impact on all participants in the marketing
channels even for basic products. All members
of the marketing channel feel the effects of
recession because sales volume level and
profit significantly decreases during
recession periods.
 Inflation is defined as the general increase

in the price of goods and services. The
reactions of channel members at the wholesale
and retail levels to high rates of inflation
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are in large measure determined by the

reactions of consumers or other final users.
High inflation rated results to a change in
consumer buying behaviour is affected as
consumers spend less in buying less. From the
perspective of the channel manager in
producing or manufacturing firm, such changes
in consumer buying behaviour should be viewed
in the context of how they might affect
channel member behaviour and what the
implications might be for channel strategy
 Deflation is defined as the general decline in

the prices of goods and services. Deflation,
static prices, or even low rates of price
increase can create serious channel management
difficulties. The problem is one of trying to
past cost-induced price increases through the
channel in the face of deflation or very low
inflation rates.
 Budget deficit and national debt will result

to high demands on capital and hence on
interest rates. High interest rates can affect
all members of the marketing channel since
high interest rates may slow down spending
habits of the consumers and in turn affects
sales for retailers, wholesalers, and
manufacturers. Another economic factor that
can affect channel management is the value of
exchange rates. A strong peso can create
problem for Philippine manufacturers by making
it more difficult to sell their products
through channel members. When the value of
peso is high, the value of Philippine products
increases relative to foreign made products
because it takes more foreign money to buy
Philippine products and fewer Philippine peso
to buy foreign goods
2. The competitive environment. Competition is always

a very important factor to be considered by all
members of the marketing channel especially in this
period where completion is global in scope. Channel
managers should not only focus on domestic
competition but have to concentrate as well, to the
existing and emerging competitors from all over the
global front. The trms global marketplace, global
arena, and global competition are not just
international jargons but realistic description of
the competitive environment in today’s increasing
number of global industries (Rosenbloom, 2016).
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Competition can be classified into four types:

horizontal competition, intertype competition,
vertical competition, and channel system
competition
 Horizontal competition is a competition between
firms of the same type. Example, is one
pharmaceutical company against another
pharmaceutical company
 Intertype competition is a competition between
with different types of firms at the same
channel level such as agents and brokers.
Example is online retailers competing with
store-based retailers
 Vertical competition refers to competition
between channel members as 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.
Channels in or to compete must be organized and
cohesive organizations. Such channels have been
referred to as vertical marketing systems and
are classified as: corporate, contractual, and
administered (McCammon, 1965: Rosenbloom, 2016);
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. In the administered channel systems,
it is the result of a strong domination by one
of the channel members frequently a
manufacturer, over other members. This dominant
position is a function of the leverage that the
dominant channel member can achieved based on a
monopoly of supply, special expertise, strong
consumer acceptance of its products or other
factors.
3. The Socio-cultural environment. The socio-cultural

environment encompasses all aspects of a society.
Marketing channels are influenced by the socio-
cultural environment within which they exist and is
a major force affecting channel structure (Olsen &
Granzin, 1994; Rosenbloom, 2016). Channel managers
therefore, must be sensitive to the socio-cultural
environment in which marketing channel exists, in
any part of the globe (Dimitrova & Rosenbloom,
2010). The most important of these socio-cultural
factors in terms of their relevance to marketing
channels are: globalization, consumer mobility and
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connectedness, social networking, and the Green

Movement
 Globalization. It has a socio-cultural dimension

that go beyond the physical flows of products and
people across borders. Globalization can also be
viewed as a frame-of-mind or outlook that is held
by millions of consumers from all over the world.
It is outlook that does not see the marketplace as
limited to one or even in few countries, but
rather as a much richer and exciting wall-hanging
of numerous countries and cultures (Cleveland et.
al., 2009). In short, consumers increasingly
expect to have access to world class products and
services at the favourable prices global
competition is supposed to promote. Channel
managers therefore have to understand that
globalization has created world class customer’s
expectations that need to be satisfied through
world class channel strategy, design and
management (Rosenbloom, 2016)
 Mobility and connectedness. With the development
of modern communications technology, mobility and
interconnectedness has increased. 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. The ability to
constantly be in move while still being able to
stay inconstant contact is present. Thus, buying
products and services while literally moving
around has become a common expectation for
consumers armed with laptops and smart-phones all
over the world. The channel strategy and design
implications of this mobility and connectivity
revolution is very clear but nevertheless, not
easy to address. First, all channel managers,
regardless of what industries they operate in,
will need to include m-commerce channels in their
channel mixes simply because highly mobile and
connected consumers expect to have such channels
available to them. Second, channel mangers will
need to sort out the roles that m-commerce channel
will play in the multi-channel mix. Finally,
channel managers will need to examine closely the
potential and limitation s of m-commerce channels
 Social networking. This refers to the interaction
in networks comprised of individuals or
organizations that are linked together based on
some types of common interest, such as friendship,
beliefs, hobbies, professional pursuits, special
knowledge and many others. Social networking has
enabled millions of consumers to share information
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and opinions about products, services, and firms

they have dealt with or are considering dealing
with. From a marketing channel view, social
networking has not only empowered consumers to
make much more informed decisions about the
products they buy, the services they use and the
firms they deal with through virtually limitless
information sharing, but it has also enabled them
to make better channel choices and made them more
demanding about the channels they choose. Social
networking enables consumers to share their
experiences about channel choices. Good and bad
experiences associated with channel choices are
quickly spread through the network. Social
networking also equipped businesses at all levels
of the channel with the capability to target
potential customers that they could not have
reached before and indeed may not have known about
(Rosenbloom, 2016)
4. The technological environment. Technology is the

most rapidly changing aspect of the environment.
The widespread use of laptops, computers, smart-
phones, and electronic books are examples of
technological advancement that marketers and
consumers adopt. Channel managers have to sort out
those technological developments that are relevant
to his own firm, as well as, the participants in
the marketing channel and then determine how these
changes might affect the channel participants
(Rosebloom, 2016). Among these technological
advancements include:
 Electronic Data Interchange- refers to the linking
together of channel member informative systems to
provide real time responses to communication and
between channel members
 Scanners, Computerized Inventory Management, and
Handheld Computers- The electronic scanning and
computerized inventory management by portable
computers, cellular phone technology and the
Internet, have created innovations in the retail
and wholesale sectors. It reduced the amount of
labor and paperwork involved, as well as, made a
wide array of timely and available information to
managers, enabling them to make better
merchandising decisions
 The Digital Revolution and Smartphones – The
digital revolution is a term used to describe the
huge transformation that has taken place over the
past years from analog and mechanical technology
to digital technology. The use of digital
technology has brought impact on channel structure
and channel strategy. The potential for channel
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managers to use this technology strategically

enhances the design and management of marketing
channels. Example is the use of smart phones in m-
commerce channel
 Radio Frequency Identification (RFID)- This is
relatively a new technology that uses a device
called RFID tag attached to a person or object,
such as product that enables that person or
product to be identified and track using radio
waves. By implanting RFID chips or tags in or on a
product, detailed information, including price,
basic characteristics, date of manufacture,
origin, and current location, can be recorded. The
RFID tag can then transmit the information by
radio waves to electronic readers, enabling
products embedded with the chips to be scanned
remotely and in bulk and thus, can lead to
effectiveness and efficiency of inventory control
and supply and eventually eliminates checkout
lines in retail stores by scanning shoppers
purchases as they are being made, rather than
bringing the purchases to a checkout line
 Cloud Computing- It is an Internet- based
technology that enables both large and small
business organizations to utilize highly
sophisticated computer applications without having
to have their own hardware, software, office
computing space and staff. The user can access the
the computing capabilities needed on demand from a
third party provider via the Internet. From the
marketing channels view, the capabilities provide
by the cloud computing mean that any firm in the
marketing channel regardless of size will find it
feasible and cost effective to obtain the
computing capabilities and expertise needed to
develop and support whatever channel management
applications needed.
5. The legal environment. The legal environment refers

to the set of laws that affects marketing channels.
The legal structure resulting from these laws is
not a static code but a continually evolving
structure affected by the changing values, norms,
politics, policies and precedents established
through court cases. Marketing channel managers
therefore need to understand and have some
knowledge of some legislation pertaining to
channels and how these legal aspects affect channel
management. The little understanding of the
legislation will help channel managers to
communicate better with legal experts and perhaps
help avoid potentially serious and costly legal
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problems that can arise in the management of

marketing channels (Rosebloom, 2016).
Title: Countdown activity
Things to do:
1. A countdown activity will be done at the end of the

week. Students must create three lists, stating (a)
three ideas or concepts they learned,(b) two ideas or
concepts that surprised them and (c) one thing they
want to do based on what they learned. Responses should
indicate if students largely grasped a week’s material
activity
Title: Case study
Date of Submission:
Rubric Used: Rubrics for Case study
Things to do:
1. Students will be asked to conduct a SWOT analysis and
analyzed the given case study at the end of the week

act
CLARK’S FLOWER SHOP

Will Disintermediation Occur in the Channel?
Marketing Channels for Flowers

Twenty years age, the local grocery store, the discount
store, and the mass marketer were not recognized as major
sellers of floral products. Flowers were not an everyday
part of people’s lives. Consumers purchased flowers mainly
from their local retail florist. National wire services,
such as Florists” Transworld Delivery Association (FTD),
also played an important role in the retail floral community
by facilitating purchases and deliveries of flowers
throughout the world. Credit cards were not as widely used
as they are today. As a result, individuals used their local
florists to arrange for the delivery of flowers to other
areas. Most consumers perceived flowers as something for
special occasions.
Today, mass-market retailing and the promotion of flowers
for everyday use permit consumers to help themselves through
cans and carry merchandising, Moreover, consumers can use
the Internet to contact florist worldwide directly and place
an order through individual florist Web site. Alternatively,
consumers can access a dot.com wire service, transmission
clearing house, or even a grower to have fresh flowers
delivered locally, nationally, or internationally.
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History of Clark’s Flower Shops

Clark’s Flower Shops is an eleven year old cut-flower
retailer located in rural upstate New York. Clark’s founded
and owned by Bob and Dee Clark, represents their vision to
put fresh flowers in everyone’s home. The Clarks have been
in the flower business since 1976. The company has grown
from a home-based greenhouse business to a regional grower
and wholesaler of potted plants with three full service
flower shops, a garden center, and two retail “bucket
shops.” Clarks offers fresh, affordable flowers to the
consumer using e-cash - and – carry business model. Roses
are the number one selling flower and Valentine’s Day is the
number one holiday for the business. Refrigeration in the
building is minimal and the flowers are marketed European
style in buckets and displayed around the store.
Historically, Bob and Dee have purchased primarily from
regional wholesalers located in Albany, New York in
Burlington, Vermont; and throughout Quebec Province. Canada.
Always open to new ideas, they have also sourced flowers
from the flower auction in Montreal, buying direct from
growers, and on the Internet, by using an online broker and
auction service, FlowerBuyer.com.
Flowers come from all over the world: bulb and corm flowers
such as tulips, lilies, and irises from Holland, roses from
Colombia and Ecuador; tropical flowers such as anthurium and
heliconia from Hawaii, protea from South Africa; and potted
plantsfrom Canada. Because the pricing strategy of the
market is based on volume sales, Clark’s purchase the
majority of its flowers in box lots, not individual bunches.
This enables Clark’s to price competitively with mass
marketers and grocery chains. Purchase price is extremely
important to the profitability of the flower business, and
pennies saved on the “cost per stem” and cost savings
resulting from more efficient methods of shipping have a
strong impact on the bottom line.
The Industry
E-commerce and the opportunity to buy directly from the
grower or online suppliers, possibly disintermediating the
regional wholesaler, have placed floral retailers such as
Clark’s in an enviable position. Traditional channels of
distribution are experiencing competition from technology-
oriented direct sellers, offering a change in traditional
purchasing methods.
Twenty years ago, cut flowers were distributed in rural
upstate New York by wholesaler truck and Greyhound bus, and
by rail before that. Typically, the flowers were either
grown in the United States and transported overland to a
regional wholesaler, or imported via broker to a receiving
port such as Miami, Florida, and then shipped via truck to a
regional wholesale distributor. Interstate haulers
transported flowers in refrigerated trucks, and then
regional distributors “spider-webbed” with panel trucks and
vans to reach local retailers. Traditional channels of
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distribution in the floral industry have been from grower to

wholesaler, to retailer, to ultimate consumer. Wholesaler
trucks still transport floral products; however, Federal
Express and United States Parcel Service have also emerged
as strong competitors in moving flowers tot he retailer and
the consumer.
Although the methods of communication and transportation
have change, retail florists still distribute the majority
of floral products; non-traditional retailers such as
supermarkets, discount stores, and street vendors account
for the rest. Customers still buy about half of their
flowers for special occasions, such as Valentine’s Day. But
distribution channels are evolving in new directions in the
21st century. Retailers and consumers can purchase directly
from growers vis phone or through a broker vis an Internet
dot-com or other intermediary reseller. These options were
previously not available.
The Wholesaler’s Role

Some retailers like to personally select the flowers they
resell. If that is not possible, then they must have
confidence in the wholesaler’s ability to make selections,
so having a trusted wholesaler nearby is very useful. Many
small floral businesses, such as Clark’s Flower Shops, do
not sell large quantities of certain flower varieties.
However, consumers often demand a wide variety of products.
Consequently, retail florists need quick and reliable access
to broad inventories of flowers to operate a viable
business. Here again, traditional wholesalers have been a
valuable resource for providing such product availability
for retail florists.
Flowers are traditionally shipped in box lots, not bunches,
to wholesalers. The traditional wholesaler can then
repackage the product and provide the needed assortments and
sizes. The small retailer confronts the dilemma of variety
versus quantity versus perishability, especially during peak
demand periods when it is difficult to stock the required
inventory given needed lead times
Source: Rosenbloom, B., (2016). Distribution Management.

Cengage Learning, pp 537 – 39.
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Worksheet for SWOT Analysis

Name: _________________________________ Score ______
Strengths Weaknesses
Intern
al
External
Opportunities S/O Strategies W/O Strategies
Threats S/T Strategies W/T Strategies
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References:
Cleveland, M., Laroche, M., and Padopoulos, N., (2009),

“Cosmopolitanism, Consumer Ethnocentrism, and
Materialism: An Eight-Country Study of Antecedents and
Outcomes,” Journal of International Marketing, 17 (1),
pp. 116 – 46
Dimitrova, B., and Rosenbloom, B., (2010). “Standardization
Versus Adaptation in Global Markets: Is Channel
Strategy Different?” Journal of marketing Channels, pp.
157 -176
Frazier, G., and Rody, R.,(1991). The Use of Influence

Strategies in Inter Firm Relationships in Industrial
Product Channels.” Journal of Marketing pp. 52 – 69
Lazarus, C. Y., (1961), “The retailer as a Link in the
Distribution Channel.” Business Horizons, pp. 95 -98
McCammon, B., (1965). “The Emergence and Growth of
Contractually Integrated Channels in the American
Economy,” Marketing and Economic Development, Chicago:
American Marketing Association pp. 498 - 504
Olsen, J., and Granzin, H., (1994). Vertical Integration and
Economic Development: An Empirical Investigation of
Channel Integration.” Journal of Global Marketing 7,
pp. 7 - 39
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Week 4
Unit 2: The Behavioural Process and Development of

Marketing Channel
Topic: Conflict in Marketing Channel

Causes of Channel Conflict
Effects of Channel Conflict and Channel Efficiency
Managing Channel Conflicts
Learning Outcomes:
1. Discuss the effects of conflicts in marketing channel
2. Identify and explain the cause of channel conflict
3. Discuss the ways to manage channel conflict
Conflict in Marketing Channel
Channel strategy and management cannot be implemented

effectively unless channel members trust each other,
are able and willing to make commitment to the channel
relationship in terms of human and capital resources,
and are willing to cooperate with each other (Kingshott
& Pecotich, 2007). Since marketing channel is a social
system, there is no escape from the inherent
behavioural dimension in any social system which is
conflict. In the context of marketing channel,
conflict is defined as a situation wherein a member of
the marketing channel observes that another member’s
actions obstruct or hinder the attainment of his or her
goals (Rosenbloom, 2016).
Conflict versus competition. Conflict in marketing
channel should not be confused with competition which
also occurs in channel (Maltby, 2009). Competition is a
behaviour that is object- centered, indirect, and
impersonal. Example, competition between supermarket
retailers and manufacturers in so called ”private
versus national brands” wherein there is an attempt by
manufacturers and supermarket-retailers to gain wider
acceptance of their respective brands which is actually
impersonal and market-centered in reality. This means
that the parties, most of the part, compete in the
consumer’s market. The level of consumer acceptance for
the manufacturer’s and retailer’s brands becomes a
function of consumer preference In contrast, conflict
is a direct, personal and opponent-centered behaviour.
Therefore, in a conflict situation, it is not the
forces of impersonal market that firms attempt to
address, but other firms in the system with whom they
are in conflict. An example, is the situation of
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“coupon wars” between manufacturers and supermarkets

wherein the supermarkets are encouraging mis-redemption
by consumers. Some of the stores were accepting any
number of coupons regardless of what products were
purchased leading to the encashment of coupons by some
consumers to hundred of pesos. The manufacturers find
this supermarket’s behaviour to be mockery of their
intended objectives in the use of coupons resulting to
heated arguments between the two parties over how many
coupons the manufacturers would redeem (Zhao, 2009)
Causes of Channel Conflict

There are several causes of marketing channel conflict
and these are: role incongruities, resource scarcities,
perceptual differences, expectation differences,
decision domain disagreements, goal incompatibilities,
and communication difficulties.
Role incongruities. A role is a set of descriptions
that describes what behaviour of marketing channel
members should be. Any given member of a marketing
channel has a series of roles to perform. Example, is a
franchisor is expected to provide extensive management
assistance and promotional support to franchisees and
on the other hand, it is also expected that franchisees
will follow the franchisor’s standard operating
procedures. If any of them violates their respective
roles then conflict arises
Resource scarcities. There are instances that conflict
arises from disagreement between channel members over
the allocation of some valuable resources needed to
achieve their respective goals. An example, is the
allocation between retailer’s and between a
manufacturer and an wholesaler. What happens frequently
is that the manufacturer will decide to keep some of
the higher volume retailers as house accounts (store
which manufacturers will sell directly keeping them off
from wholesalers) leading to the objections of the
wholesalers ending up in conflict.
Perceptual differences. Perception refers to the way an
individual views and interpret environmental stimuli.
However, there are differences in which this stimuli is
being viewed or interpreted by each channel members. An
example is the Point of purchase (POP) displays, which
the manufacturer perceives to be valuable promotional
tool needed to move the products in a retailer’s
shelves. However, retailers find this POP to be a
useless junk machine occupying too much valuable floor
space.
Expectation Differences. Various channel members have
expectations about the behaviour of other channel
members,. As exemplified in the differences in forecast
made by channel members wherein there are instances
that a channel member made an inaccurate forecast and
still, the channel member who did the forecast will
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still insist to take action based on the predicted

forecast.
Decision domain disagreements. Channel members
explicitly or implicitly engraved in themselves an
areas for decision making that they feel are
exclusively theirs. However, there are situations
wherein manufacturers and retailers clash each other.
An example is in the pricing decision. It is common
that many retailers feel that pricing decisions is
their decision making domain but manufacturers
providing supplies for these retailers feel that they
should have a say in price-making decisions ending up
in conflict between the two.
Goal incompatibilities. Each channel members has their
own goals and objective they would like to achieve.
When the goals of two or more members are incompatible,
then conflict arises.
Communication difficulties. Communication is the link
between channel members and if there is breakdown in
communication which mostly occurs in the contract
itself, then it may turn a cooperative relationship
into a conflicting one. Communication activities
undertaken by channel members create a flow of
information within the channel, that is necessary for
the efficient flow of products or services through the
channel
Effects of Channel Conflict and Channel Efficiency

The concern of channel managers with regards to the
effect of channel conflict is how the conflict affects
channel efficiency. Channel efficiency is defined as
the degree in which the total investment in the various
inputs necessary to achieve a given distribution
objective can be optimized in terms of outputs (Etgar,
1979; Rosenbloom, 2016). In most cases,, it can be said
that there is a direct relationship between level of
optimization of inputs and channel efficiency which
means that the greater is the degree of optimization of
inputs carrying out a distribution objective, the
higher the efficiency, and vice versa.
Managing Channel Conflict

Literatures have shown that there are several
approaches in managing conflict: 1) detect conflict or
potential conflict, 2) appraise the possible effects of
conflict, and 3) resolve channel conflict
Detecting channel conflict or potential channel

conflict. In practice, channel conflict is detected
after it is well developed. Thus, channel managers must
have some kind of “early warning system” to help them
address channel conflicts. One way is to make an
independent research firm, trade associations, or trade
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magazine publishers conduct a survey among channel

members to pinpoint the areas of conflict so as to
avoid bias. Another way of uncovering potential
channel conflict is to conduct a marketing channel
audit which must be done on a periodic and regular
evaluation of the key areas of relationship of a given
channel member with another members. Distributor’s
advisory councils or channel members committee is
another approach in the detection of potential channel
conflict. With the help of these groups, top
management, they can discuss on a regular basis a wide
range of channel issues and strategies.
Appraising the effect of conflict. A growing body of

literature has been developing to help the channel
managers in developing methods for measuring conflict
and its effect on channel efficiency. Among these
measures are: scale for measuring intensity of conflict
between producers and distributors in building
products, grocery products, and conjoint technique
method.
Resolving conflict. If conflict arises in a nay

situation, the channel manager should take action to
resolve the conflict if it is adversely affecting the
channel efficiency. Literatures have suggested several
ways of resolving conflict such as arbitration. But the
most underlying principle in resolving conflict is that
“Timely action on the part of some party to the
conflict is needed if the conflict is to be
successfully resolved. Conversely, if conflict is
simply ‘left alone,” then it will not be resolved and
may even get worse.” Therefore, channel members have to
make actions to resolve the conflict.
Title: Three Summaries activity
Things to do:
1. A “Three summaries” activity will be done at the end of

the week. Students will be asked to write three
summaries of the discussed lessons. The first should be
10 to 15 words. The second is 30 to 50 words. The third
is 75 to 100 words. This activity will check how they
have understood the topics given
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activity
Title: Situational analysis and Essay questions
Date of Submission:
Things to do:
1. At the end of the week, the students will be asked to

read a situation and afterwards answer specific
questions related to the situation

activity
Situation Analysis
For many years, Procter and Gamble, as well as the other

giant consumer packaged goods manufacturers, used special
deals and merchandising campaigns as the mainstay of their
channel management strategy of their channel management
strategy for dealing with channel members. Special
discounts, allowances, slotting fees, coupons for displays
were used abundantly to get retailers and wholesalers to
push their products. The main problem with that approach to
motivating channels is that it can be very expensive for the
manufacturer. It often requires higher costs for special
packaging and handling, creates “peaks and valleys” in
production, and increases the manufacturers promotional
costs.
Moreover, from the consumer’s point of view, the ups and
downs in prices, when one week a box of Tide might sell for
$3.79 and the next week for $7.79, fosters price sensitivity
and erodes brand loyalty. In a fundamental break with this
status quo approach to channel management, P&G offered its
products to channel members at a lower price on an everyday
and sustained basis. P&G believed this would reduce its own
costs and enable channel members to pass on lower prices to
consumers, also on an everyday basis.
Questions
1. What do you think of P&G’s channel strategy?
2. What are the strategy’s possible strengths and

weaknesses?
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3. Discuss briefly from the standpoints of the

manufacturer and channel members.
Source: Rosenbloom, B. (2016). Distribution Management:
Channel issues for Discussion. Cengage Learning ,
p.17
References
Kingshott, R. & Pecotich, A., (2007). “The Impact of

Psychological Contracts on Trust and Commitment in
Supplier- Distributor Relationships,” European Journal
of Marketing (Vol. 41, No. 9/10)
Maltby, E., (2009). Chrysler Dealerships Fight Closings,”

Wall Street Journal: B2

Zhao, K., (2009). Retailers and Manufacturers Fight Coupon

Fraud,” Wall Street Journal: B5
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Week 5

Channel
Topics: Strategies in Marketing Channel

Marketing Channel Strategy and the Role of
Distribution in Corporate Objectives
Designing Marketing Channels
Learning Outcomes:
1. Enumerate and discuss the different marketing
channel strategy and the role of distribution in
corporate objectives
2. Design marketing channels
Strategy in Marketing Channels
Channel strategy is defined as” broad principles by

which the business unit expects to achieve its
marketing objectives to a target market.” (Kotler,P.
1988). Marketing channel strategy is defined as the
broad principles by which the firm expects to achieve
its distribution objectives for its target markets.
This definition focuses more on the principles as
guidelines for achieving the firm’s distribution
objectives rather than the general marketing
objectives. Thus marketing channel strategy is
concerned with the three Ps of the marketing mic:
product, price, and promotional strategies (Cravens,
1997, as cited by Rosenbloom, 2017)
To achieve their distribution objectives, most firms
have to address the six basic distribution decisions
which are the “heart and soul” of distribution when
viewed from a marketing channel management
perspectives.:
1) What role should distribution play in the firm’s
overall objectives and strategies?
2) What role should distribution play in marketing mix?
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3) How should the firm’s marketing channels be designed

to achieve its distribution objectives?
4) What kinds of channel members should be selected to
meet the firm’s distribution objectives?
5) How can the marketing channel be managed to
implement the firm’s channel strategy and design
effectively and efficiently on a continuing basis?
6) How can channel member performance be evaluated?
Marketing Channel Strategy and Role of Distribution

Strategy in Corporate Objectives
The role that distribution is expected to play in

a company’s long-term overall objectives and
strategy. Firms have to decide whether the
achievement of the specific distribution
objectives is crucial to the long run success of
the firm (Porter, M, 2001). If the answer is yes,
then the role of distribution should be considered
at the highest management levels of the
organization
Marketing Channel Strategy and the Marketing Mix

Top management has to deal with the issue on the
role of distribution in the marketing mix.
Developing a marketing mix of product, price,
promotion, and distribution strategies that meets
the demands of the firm’s target market more than
its competitors is the essence of modern marketing
management. The job of the marketing manager is to
develop the right combination of the four Ps to
provide and maintain the desired level of target
market satisfactions. Therefore, the role of
distribution must be considered along with the
product, price and promotion.
Channel Strategy and Designing Marketing Channels

Channel strategy should guide channel design so as
to help the firm attain a differential advantage.
Differential advantage or sustainable competitive
advantage refers to a firm’s attainment of an
advantageous position in the market relative to
competitors- a place that enables it to use its
particular strengths to satisfy customer demands
better than competitors on a sustainable long-term
basis. The total available resources of the firm
and all its major functional activities can
contribute to the attempt to create a differential
advantage. Channel design is very important in
gaining differential advantage. A differential
advantage based on the design of a superior
marketing channel can yield a very strong and long
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term advantage because this advantage is hard to

imitate by its competitors. In the channel
manager’s attempt to develop differential
advantage through channel design, the concept of
channel position can serve as a helpful guide.
Channel positioning is what the firm does with its
channel planning and decision making to attain the
channel position. The key ingredient is to view
the relationship with channel members as a
partnership or strategic alliance that offers
recognizable benefits to the manufacturer and
channel members on a long term basis. (Narus &
Anderson, 1988). A well positioned channel also
means that the channel manager will have the
confidence and support of the channel members in
his attempt to gain a differential advantage.
Things to do:

want to do based on what they learned. Responses
should indicate if students largely grasped a week’s
material

activity
Title: Reflection paper
Date of Submission:
Rubric Used: Rubrics for reflection paper
Things to do:
1. At the end of the week, students will be asked to make
a reflection paper on marketing channel strategies

activity
How to Best Manage Channel Conflict (and How to Resolve It)

By David Hoos
Last Updated: August 17, 2019
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Channel conflict can be lethal to your sales, but these

three examples show you how to overcome it.
When brands try to avoid channel conflict with their
retailers they often sacrifice sales on their ecommerce
site. But it doesn’t have to be that way. Here are three
ways to turn the problem into a solution.
You think retail is tough, try manufacturing.
Not only do those who design and produce the products have
to worry about a steady supply of materials, storage costs,
shipping costs, and plant maintenance… they have to keep
their sales channels happy.
And that can be a chore.
Here’s the toughest thing: the buyer loves to look for ways
to “cut out the middleman.” That creates a major dilemma. If
the manufacturer sells direct-to-consumer (D2C), the buyer
is happy, but wholesalers, dealers, sales representatives,
and retailers aren’t. The most successful companies that are
implementing D2C into their selling strategy are finding a
balance between selling through their own ecommerce stores
and also through retailers.
For example, one company that’s currently disrupting the
men’s grooming industry with this strategy is Harry’s. What
initially started as an online-only shaving subscription
service has turned into a massively successful men’s
grooming brand that sells their products through an
ecommerce store as well as in various big-box retailers such
as Target and Walmart. This company has avoided channel
conflict by maintaining a standard price for their products
across all sales channels to circumvent any price
competition between the retailer and manufacturer.
The key is maintaining stability throughout your sales and
distribution channels. If the manufacturer limits
distribution to flow only through retailers and other
distributors to the customer, the brand distances itself
from the marketplace and loses sales.
Now let’s take a closer look at why channel conflict should

be one of the number one concerns for your business.
Channel conflict and your number one concern

Let’s be sure to begin this discussion by focusing on the
main thing. We often speak with clients whose primary
concern is for sales. Others are worried about offending
their distributors.
But those aren’t the best way to frame your channel conflict
strategy. Here at The Good, we care about sales and brand
relations. Our philosophy, though, is that every decision
should begin with concern for the customer.
When customers are pleased, demand is high and sales are

good. When customers aren’t pleased, heads begin to roll.
Never lose sight of who really provides paychecks for your
staff and employees. By developing that mindset in all you
do – including your agreements with retailers and others in
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your distribution system – you’ll all have the same goal in

mind.
When the customer is happy, every part of every channel
works better. Make that idea the center of every marketing
discussion, and you’ll be amazed at the difference it can
make in team happiness and teamwork.
Channel conflict is potentially lethal to your sales efforts
Every pie only has so many pieces. If the pie is the

difference between manufacturing costs and the selling
price, you can slice it up in several ways.
Here are a few examples:
 You can sell direct and either require buyers to pick

up the products themselves or cover shipping and
handling costs. You get the whole pie.
 You can sell only through retailers and either absorb
shipping or add it on. You split the pie with someone
else.
 You can set up a system that might include field
representatives, wholesalers, a commissioned sales
team, affiliates, and retailers. Everyone wants a
larger piece of the pie.
When multiple businesses are selling the same product,
there’s danger of a pricing war. One undercuts the price of
the others, hoping to make it up in additional sales. Then
someone pushes the price even lower, and customers begin to
get confused. Are the low-priced items as good as the higher
priced items? Your products can lose value in the eyes of
the end users.
Another effect of pricing battles is that the prospect will
often hold up on a buying decision and wait for the price to
drop even lower. That can lead to sales stagnation.
Additionally, those who have already purchased your goods
will feel cheated when they see lower prices. That can lead
to higher return rates and degradation of your brand.
Price wars can also weaken your distribution channel. They

can lose interest in promoting your company’s products,
maybe even stop carrying your goods and look to your
competitors. When the focus is on the pie, some might go
away hungry.
Channel conflict the smart way
Smart companies keep the focus on the customer and get

everyone who touches their products engaged in providing
superior value to the customer. That puts the pie in a
different light altogether. All stakeholders can unite in an
effort to keep prices stable and share the pie fairly.
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As the manufacturer, you can sit down at the table shoulder-

to-shoulder to help pen agreements that outline the rights
and responsibilities of every member of the sales effort.
Your own participation can be a part of that strategy.
With a customer-centric effort, it won’t be difficult to

show your distribution partners why it is important for you
to join the effort and how your part will help everyone do
better.
3 Ways to Overcome Channel Conflict
Here are three examples of how your brand can thrill

customers by participating in direct-to-consumer sales –
without angering or alienating your distributor base.
Exclusive products
Offer products on your ecommerce site that are exclusive to
you. Examples are shoes customized to the buyer’s feet, a
unique hydration bottle design, a specially branded tent, or
a jacket that can only be purchased on your site.
Exclusive products create buzz, build demand, and show off

your brand. This tactic avoids channel conflict with your
retail outlets and other sellers. That’s because you aren’t
directly competing against them, and you’re not undercutting
them on price.
You’re simply offering a unique product; you’re keeping part

of your production in house, but there’s still plenty else
to sell.
Chaco will make sandals to match your school colors.

Retailers can’t carry every conceivable combination, but the
manufacturer can. It’s a win-win-win situation.
Providing personalized gear isn’t doable for all brands, but

most manufacturers can provide a unique option only
available on the brand site. You don’t have to go big to
generate sales. You only need to be creative.
Product Giveaways
Every consumer loves free stuff. By using this tactic, you
can create value for your consumer. “Buy a ski jacket at the
regular price, get your choice of gloves free.”
You’re not undercutting your retailers by lowering the price

of the jacket. You’re adding value by including extra
product. A variation is to add on services or extend the
warranty.
Your fans will love it, and your entire sales channel will
benefit from the added exposure and marketplace chatter.
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Many will be attracted by your offer, but will go to another

website to make the purchase (sans the free stuff) in order
to get a lower advertised price.
Win-win-win: The customer, the manufacturer, and the rest of

the sales team.
References
Kotler, P. (1988). Marketing Management Analysis, Planning,

Implementation, and Control. 6th ed. Englewood Cliffs.
N.J., Prentice Hall, p.71
Porter, m. (2001). “Strategy and the Internet.” Harvard

Business Review, p 63- 68

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Week 6

Channel
Topics: Selecting the Channel Members

Target Markets and Channel Design Strategy
Learning Outcomes:
1. Describe the steps in selecting the channel members
2. Identify and discuss target market and channel
design strategy
Concept Digest (Discussion
SELECTING THE CHANNEL MEMBERS

It should be noted that in selecting employees, most
firms are very careful and wants to have the best
employee for the job and these procedure holds the same
to selection of channel members since success in the
market place needs channel members who can efficiently
perform the distribution tasks necessary to implement
the channel strategy.
The Selection Process

The channel members selection consists of the following
steps: 1) finding prospective channel members; 2)
applying selection criteria to determine the
suitability of prospective channel members; 3) securing
the perspective channel members as actual channel
members.
 Finding prospective channel members- channel
managers may seek prospective channel members from
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the following sources in order of importance: 1)

field sales organization; 2) trade sources; 3)
reseller inquiries; 4) customers; 5) advertising;
6) trade shows; and 7) other sources which include
chamber of commerce, banks, previous applicants,
business databases, and the Internet
 Applying the selection process- After having a
list of prospective channel members, channel
managers have to appraise these prospects based on
selection criteria. Therefore, it is very
necessary for the firm to develop selection
criteria for choosing channel members. There are
several lists of selection criteria in the
literatures such as: Brendel’s list of selection
criteria, Hlavacel and McCuiston criteria; and
Shipley base criteria. Yeoh and Calantone
identified six major categories or core
competencies of selection criteria: 1) commitment
level; 2) financial strength; 3) marketing skills;
4) product= related factors; 5) planning
abilities; 6) facilitating factors
 Securing the channel members. The selection
process is a two way direction- not only for the
producer or manufacturer but as well as to the
intermediaries at both the wholesale and retail
levels. The channel managers have to use number of
specific incentives when attempting to secure
channel members. These should be aimed at
converging the firm’s commitment to support
prospective channel members so that these
prospects are more likely to be successful with
the line. Some of the specific incentives for
securing channel members include: 1) good
profitable product line; 2) advertising and
promotional support; 3) management assistance; and
4) fair dealing policies and friendly
relationships.
TARGET MARKETS AND CHANNEL DESIGN STRATEGY
Market variables are the most fundamental affecting the

design of marketing channels. Therefore, marketing
channels design must be market-driven so as to meet the
demands of the firm’s largest market which is the
customers. A market framework consisting of four
dimensions as previously discussed include: market
geography, market size, market density, and market
behaviour.
Market Geography and Channel Design Strategy

 Market geography refers to the geographical extent
of markets and where they are located. The channel
manager is charges with the task of evaluating
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market geography relative to channel structure to

ensure that the structure is able to serve the
markets effectively and efficiently. As part of
the firm’s overall marketing strategy, the channel
manager may be called on to define the
geographical locations of the target markets. In
locating target markets, the channel manager can
make use of the following as sources of data:
Census bureau, key published sources such as ZIP
Codes, Commercial Atlas and Market Guide. What is
important is for channel managers to be aware of
and sensitivity to changes in market geography
reflected in the data and a willingness to examine
thyeir possible implications for channel design
decisions
Market Size and Channel Design Strategy

 The second dimension of the market framework is
market size which refers to the number of buyers
or potential buyers (consumer or individual) in a
given market. It was concluded in Bucklin Model
that there is some external marketplace economies
for larger volumes of purchases (better
marketplace facilities at a lower cost). This
means that as volume of purchase increases and the
cost of using intermediaries is spread over a
large number of buyers, costs decreases. The
Bucklin model provides insight that there is a
possible relationship between market size and
channel structure. Based on the theoretical model,
channel managers seeing data on a changing market
size have to be more sensitive to its implications
for channel structure.
Market Density and Channel Design Strategy

 Market density refers to the number of buyers or
potential buyers per unit of geographical area. It
was earlier discussed that market density has some
relationship with channel structure. A very useful
concept that helps illustrate the relationship is
that of efficient congestion. This concept showed
that congested or high density markets can promote
efficiency in the performance of several basic
distribution tasks, particularly in the
transportation, storage, communication and
negotiation. The major strategic implication is
that the opportunity to achieve a relatively high
level of customer access at low cost is higher in
dense markets than in more dispersed ones.
Market Behaviour and Channel Design Strategy
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 The fourth dimension, market behaviour consists of

four sub dimensions which include: when, where,
who, and how the market buys.
 When customers buy. Two important
implications for the channel managers are
related to this sub-dimension. First,
seasonal variations tend to create peaks and
valleys in the manufacturer’s production
scheduling. Second, when customers buy as it
affects channel design strategy is also of
particular relevance in the selection phase
of the channel design. This means that
channel managers must try to select channel
members who are in tune with the changing
patterns of when people buy. Thus, channel
mangers should try to avoid selecting channel
members who are not familiar with the timely
needs and demand of the markets they serve.
 Where customer buy. The types of outlets
which customers choose to make their
purchases and the location of those outlets
are important driver of channel design
strategy (Dholakia et al., 2010). Research on
where customer buy is often based on the
assumption that they will behave so as to
maximize their convenience in the selection
of retail outlets. It means that consumer is
seen as engaged in balancing the desirability
of near and distant retailers against cost,
time, and energy that must be spent in
overcoming distance. If the cost is high when
patronizing a distant retail outlet, then
customer may look for one that is near and
less cost. However, with the growth of online
shopping as a major channel alternative, the
location of retailers or other sellers is of
little or no importance to customers who have
chosen to use Internet as a channel of
choice. Since channel managers cannot afford
to neglect electronic or online marketing
channels, much of their attention still needs
to be focused on changing patterns of where
customers are shopping in the world of
conventional channels.
 How customers buy. Customer preferences
reflected in purchase behaviour indicate how
market buys. Each behaviours shown by
consumers can vary across different market
segments and over time for any given product
category. Example in food purchases, higher
income families buy large quantities and shop
mostly in supermarkets as compared to lower
income families. The changing nature of how
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customers buy means that channel managers

must be in tuned with the changes that will
most likely occur in the market environment.
Channel managers therefore must evaluate if
the change in the buying behaviour is in the
long term or short –term. If the change is
most likely in the long term, then channel
managers must have to make swift action in
making channel design decisions to meet these
changes so as to gain important differential
advantage to the firm, especially if the
channel manager beats its competitors in
making such decisions.
 Who participates in the buying decision. It
is important to analyze who decides to make
the purchase. At the consumer level, the
question of who takes part in buying decision
is usually in the context of a family unit.
Influence on buying decisions revolves around
the roles played by the husband, wife, and
sometimes the children. In the industrial
market, there are several people in the
buying firm involved in the purchase decision
and this is known as multiple influences on
the buying decisions. The buying center has
six distinct roles that various individuals
in the organization fill:
1. Users- the members of the
organization who will use the product
and at most times, initiate the
buying proposal and help define the
product specifications
2. Influencers- people who influence the
buying decisions who defines
specifications and provide
information for evaluating
alternatives
3. Deciders-people who have the power to
decide on product requirements and
/or suppliers
4. Approvers- people who must authorize
the proposed actions of deciders or
buyers
5. Buyers- people with formal authority
for selecting the supplier and
arranging the terms of purchase.
Their major role is to select and
negotiate with the vendors.
6. Gatekeepers- people who have the
power to prevent sellers or
information from reaching members of
the buying center. Examples are
purchasing agents, receptionist,
telephone operators, and others
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The tasks channel manager is facing in both

consumer and industrial market is to make a
careful evaluation of identifying who is
involved in making buying decisions, for them
to directly hit the influential parties.
Thus, the channel manager is also tasked to
determine whether the planned or existing
channel structure will inhibit or facilitate
the firm’s attempts to reach the more
influential parties to buying decisions.
Title: Exit ticket 3-2-1 activity
Things to do:
1. An “Exit Ticket: 3 – 2 - 1” activity will be done at

the end of the week. Students will be asked to write an
exit ticket, having them reflect on the content from
lessons discussed to determine how well they processed
and retained the lessons
activity
Title: Case Analysis
Date of Submission:
Rubric Used: Rubrics for Case Analysis
Things to do:
1. Students will be asked to conduct a case anlysis at the

end of the week

activity
Star Chemical Case Study
Background:
Star Chemical is a chemical supply company who has recently
struggled due to the fact
that it could not compete on price with its competitors and
their clientele was moving elsewhere. In addition, Star
Chemical was not creating its own line of consumer products
like many of their competitors were because of their lack of
knowledge in marketing and not having a specific product
which they could sell. However, Star Chemical recently
created a pool cleaning chemical which could launch them
into the consumer market. The company is unsure about how
they should go about the process. Their ideas for handling
this were either to let the current sales force attempt to
sell the chemical, use either a distributor, or start a
whole new sales force. A few of the issues that were
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presented either way were: which channels should they use

and markets should they penetrate, whether to sell in bulk
or not, and whether to use a push or pull marketing
strategy. Proposals for either sales strategy would be
judged against a scale evaluating: effectiveness in reaching
customers, profit potential, experience the company will
gain, total investment required, and ability for company to
cut short term losses.
Source: Patrick Davis
Discussion Question
1. If you will be asked to become the consultant of the
company, what option do you think is the best among the
four (4) options the company wants to employ?
2. Support your answer by citing the pros and cons of each

options
References
Dholakia,U., Kahn, B., Reeves, R., Rindfleisch, Stewart, D.,

and Taylor, E., (2010). “Consumer Behaviour in a
Multichannel, Multimedia retailing Environment.”
Journal of Interactive Marketing, volume 24: pp 86 - 95

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Week 7
Unit 3: Managing the Marketing Channel (Part 1)
Topic: Definition of Channel Management and Motivation

Management
Product Issues in Channel Management
Learning Outcomes:
1. Discuss channel management and motivation management
2. Analyze and explain product issues in channel
management
Definition of Channel Management and Motivation Management

 Channel management is defined as the administration of
existing channels to secure the cooperation of channel
in achieving the firm’s distribution objectives.
 Motivation management refers to the actions taken by
the manufacturer, producer, or franchisor to foster
channel member cooperation in implementing the
distribution objectives. It involves: 1) finding out
the needs and problems of channel members, 2) offering
support to the channel members that is consistent with
their needs and problems, and 3) providing leadership
through effective use of power (Rosenbloom, 2016)
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Finding out the needs and problems of channel members.

A fundamental part of channel management is that of
motivating the channel members. Finding out the needs
and problems of channel members is not a matter of
chance. Channel managers must not solely rely on
existing channel communications but rather, they must
look at the regular flow of communication in the
channel to gather the necessary data by using such
approaches: research studies made by the firm or by
those made by outside firms to assure objectivity,
conducting periodic marketing channel audits, and using
the information coming from the distributor advisory
councils
Offering support to channel members. Approaches to

offering support to channel members can be grouped into
the following: cooperative arrangements; partnerships
or strategic alliances, and distribution programming.
 The cooperative approach is the simplest approach
in providing support to channel members. The
manufacturer and channel members may agree on a
series of cooperative activities like cooperative
advertising, promotional allowances, or incentive
programs.
 The partnership or strategic alliance concept

involves a careful description of the mutual roles
of the manufacturer and the channel members. The
idea underlying such relationship is mutual
support between the manufacturer and channel
members in order to develop a well-organized team
effort in the distribution of manufacturer’s
product. It this is well executed then it
alleviates channel members motivation
 Finally, distribution programming offers the most

sophisticated and comprehensive approach to
channel member motivation. It involves the
development of a comprehensive plan for managing
the marketing channel. In this approach, the key
relationship between manufacturer and channel
members are studied and a comprehensive channel
management plan is developed to cover all of
those areas.
Providing leadership through effective use of power.

Leadership must exercised on a continuing basis if the
motivation programs are to operate effectively. Channel
members must deal with several significant challenges
confronting inter-organizational setting of the
marketing channel which include: looseness of the
organization of many channel systems; an inclination of
channel members to avoid central or unified direction;
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the lack of ownership, and no clear boundary in super-

subordinate relationship
Title: One Minute paper activity
Things to do:

understanding

activity
Title: Essay questions
Date of Submission:
Things to do:
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questions on channel management and motivational
management at the end of the week
1.1 Explain the importance of motivational management
in managing marketing channel?
1.2 As a future service manager, how will you provide
leadership through effective use of power?

activity
Reference

Week 8
Topic: Product Issues in Channel Management

Product Management and Channel Management
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Learning Outcomes:
1. Analyze and explain product issues in channel
management
2. Discuss product management and channel management
Product Issues in Channel Management
 Effective channel management requires that the

channel manager must be aware of how channel
management interfaces with other variables of the
marketing mix: product, price, promotions and
logistics. The channel manager must view the
firm’s strategies in each of these marketing mix
areas as resources that can be used for improving
the firm’s channel management strategies
(Rosenbloom, 2016)
Product Management and Channel Management

 The three basic areas of product management as it
interfaces with channel management are: 1) new
product planning and development; 2) the product
life cycle; and strategic product management
1. New product planning and development. The

channel manager must be concerned with basic
product channel management such issues such
as: a) obtaining channel member input into
new product planning; b) promoting channel
member acceptance of new product; c) fitting
new products into channel member assortments;
d) educating channel members about new
products; and e) making sure that new
products are trouble free as possible
2. The product life-cycle. Channel managers must

understand the implications of the product
life cycle implications for channel
management so as to have an effective channel
management that would lead to enhancing the
product life cycle. Channel managers should
ensure that at the introductory stage of the
life cycle, they must ensure that a
sufficient number of channel member is
available for adequate market coverage and
this must be reinforced as it moves toward
the growth stage. As it moves on to the
maturity stage, extra focus must be placed on
motivating channel members to help alleviate
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the impact of competitive products and the

possibility of changing the channel structure
to extend the maturity stage. Finally, as the
product enters the decline stage,
insignificant channel members must be phased
out as they made have little interest in
distributing the aging product.
3. Strategic management of the product line is

the responsibility of all manufacturers if
they want their product line to remain
visible and profitable. Manufactures should
adopt some strategies like product
differentiation strategy, product
positioning, product line expansion and
contraction strategies, trading up and
trading down strategies, brand strategies,
and product service strategy. Channel
managers must understand the relationship
between product strategies and channel
management to support the successful
implementation of these product strategies
Title: Three Summaries
Things to do:

activity
Date of Submission:
Things to do:
1. Students will be asked to make a reflection paper on
managing marketing channels at the end of the week
activity
Article for Reflection
7 Major Challenges of Channel Management

Published on February 16, 2016
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By: Sugata Sanyal

Founder & CEO ZINFI Technologies
1. Channel partners are companies, not people. Ordinarily

when we talk about management, where there is some
level of control over employees or consultants or
contractors, we are exerting some level of control over
people. But when we talk about managing a channel, the
level of control is much lower: first of all because
it’s an indirect sales force and, second, as I’ve
already noted, we’re managing companies, not people. Of
course those companies are made up of people—sales
people, technical people, marketing people—but in the
end we’re trying to manage an entity rather than
individuals. That’s an important difference that
creates a huge amount of complexity.
2. Channel partners do not report to vendors. In the case
of a direct sales force, there is a hierarchy. You have
a manager who reports to a director who may report to a
VP, but with a channel organization, you have a company
reporting to a channel account manager or a partner
business manager. That reporting relationship is
indirect. If some partners don’t perform over one or
two or three quarters, they don’t get fired for missing
their mark. They may miss some incentives, but they
don’t get fired for poor performance. Eventually, if a
partner doesn’t perform over a long period of time,
that partner may be replaced, but it doesn’t happen as
quickly as it would when you’re managing a direct sales
force.
3. Channel partners have their own priorities. The
challenge here is that those priorities do not
necessarily align with the priorities of a vendor. If a
vendor is trying to promote a specific product or
trying to penetrate a specific market—say, verticals
like manufacturing or healthcare or whatever–it may or
may not be in the interest of the partner to carry out
those activities. So it’s crucial for the organization
to understand what the priorities of those partners are
instead of randomly pushing programs and deploying
resources.
4. There are different types of partners, and they require
different engagement models. Some partners sell to
small and medium-size businesses (SMBs), some partners
sell to midmarket organizations, some sell to
enterprises and some sell to all or a combination of
two or more segments. For an organization to align
behind the needs of various types of partners, have
appropriate programs and make them meaningful requires
a significant level of thinking and homework which, a
lot of times, companies skip. Therefore, many of the
initiatives that are rolled out in the channel don’t
really have an impact. In addition to differences in
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types of partners—what we might call practices or areas

of focus—there are also differences in relationship
based on revenue. Partners who are larger—larger in the
sense that they carry a bigger portion of a vendor’s
revenue—tend to more important to the vendors than
those partners who don’t carry a lot of products.
Aligning the appropriate level of resources with high-
velocity and high-volume partners vs. low-velocity,
low-volume partners is critical, and that can make
channel management quite complex.
5. A partner’s loyalty is driven by financial
motives. Just like in a startup environment, where
people may be partly motivated by a belief in a cause
or inspiration but are ultimately driven by the
prospect of financial gain, most of the time the
relationship between a partner and a vendor is
fundamentally driven by financial gain. If the path
toward that financial gain is not clearly defined, it
can cause a lot of friction. Similarly, if the
expectations change or are realigned with respect to an
initiative, that can create complexity.
6. Partner success depends on their competencies in an
ecosystem. Very rarely does a partner—especially in the
technology or solution domain—sell only one product.
So, for example, if a partner is selling to the
construction industry or the technology sector or
manufacturing or other areas of high tech, that partner
may carry two, three, four or as many as 50 different
vendors. A partner’s competencies play a big role in
determining its interest in a specific set of
solutions. Understanding that and aligning behind those
competencies is critical for success. One last point:
While many companies have alliance programs, and they
tend to apply them to solution selling, they do not
apply much to franchise or retail businesses.
Therefore, if an organization is addressing those types
of markets, the level of complexity can be quite high.
7. Forecasting is very hard when it comes to run rate and
large-deal businesses. One of the major challenges in
channel marketing is developing forecasts, especially
if a company is growing. In cases where there is a
revenue business, and the revenue doesn’t change much
from quarter to quarter—which may the typical scenario
with retail and franchises—it’s relatively easy to
predict within a few percentage points what the demand
is going to be.
Reference

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Week 9

Topic: Pricing issues in channel management
Major pricing issues that manufacturer faces
Learning Outcomes:
1. Discuss the pricing issues in channel management
2. Explain the major pricing issues that manufacture
faces
Pricing Issues in Channel Management
 Manufacturer’s should not only consider the

internal cost, target markets, and competitive
considerations but they have to consider as well,
the channel considerations since pricing strategy
can have a very influential effect on channel
members behaviour. If channel members see the
manufacturer’s pricing strategy as matching their
own interests, they are more likely to provide a
higher level of cooperation. Channel managers on
the other hand must also be aware of the anatomy
of channel pricing in order to understand that
each channel member need to be sufficiently
compensated for performing their distribution
teaks.
 In developing pricing strategies, the manufacturer
must focused its attention to the following
guidelines (Oxenfeldt, 1975: Rosenbloom, 2017):
1. Profit margins made available to channel
managers should be adequate to cover costs and
provide for sensible profits.
2. Margins offered to different types of channel
members should differ in rough proportion to
the functions they perform
3. Margins available to channel members on the
manufacturer’s product s should be competitive
with those of rival brands
4. Special arrangement between the manufacturer
and channel members that result in either
increase or decrease in services rendered
should be reflected in the margins available to
channel members
5. Whenever possible, the manufacturer should try
to conform to conventional norms for margins in
the trade
6. Variations in margins on different models or
styles of the manufacturer’s product should be
logical and usually not too far off the
conventional margin in the trade
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7. If price point exist at the wholesale and

retail levels, they should be recognized and
products should be priced so as to meet those
price points, and
8. Variations in prices by a manufacturer for
different products in its line, should ,
whenever possible, be associated with the
visible differences in product features to help
channel members do a more effective
distribution selling
Major Pricing Issues That Manufacturer Faces

 There are six major pricing issues that that
manufacturer is likely to face
1. Pricing control in the channel. If the

manufacturer wants to exercise control over the
channel members pricing policies, it must not
coerce and instead use friendly approaches that
allow channel members to decide for themselves
if they want to follow the pricing strategies
of the manufacturer
2. Changing price policies. The changing price
policies may have some impact on channel
member’s behaviour. Channel managers therefore,
must attempt to predict the channel members
reactions to these price changes before
implementing the change.
3. Passing price increase through the channel.
Price increase can be stopped especially during
inflationary periods. Channel members therefore
must have to absorb the increases themselves if
they cannot pass the price increase to other
channel members. On the other hand,
manufacturers must exert effort to consider
other options or strategies to address the
negative effects of such price increases to
channel members
4. Dual pricing. The manufacturer should price
products sold directly to final customers must
have an equal or higher prices than those sold
through independent channel members (Yan,
2008). The appropriate pricing strategy for
manufacturers selling their products directly
to consumers as well through independent
resellers was to never sell at prices lower
than those charge by the independent channel
members
5. Using price incentives in the channel.
Manufacturers use a wide range of pricing
strategy as a promotional tool. Among these
strategies include special deals, seasonal
discounts, rebates, price reductions, coupon,
two for the price of one and among others. The
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purpose is to increase sales and market share

of the product of the manufacturer that is
offering the special prices (Blattberg et al.,
1981: Rosenbloom, 2017). Manufacturers
therefore, must try to make price incentives
attractive to channel members as they are to
consumers if they want to get a strong channel
member support
6. Dealing with the gray market and free riding.
The gray market refers to the sale usually at
low prices, of brand name products by
unauthorized distribution or dealers (Cross et.
al, 1990). Free riding is a term used to
describe the behaviour of distributors and
dealers who offer low prices but little
services if any, to customers. By cutting down
the prices charged by distributors or dealers
who display a full selection of the products
and provide information, sales assistance and
after sales service, the discounters get a
“free ride” from the services provided by the
higher priced, full service distributors and
dealers
Title: Countdown Activity
Things to do:

activity
Title: Journal Critique
Date of Submission:
Things to do:
1. Students will be asked to make a journal critique at
the end of the week

activity
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Article
Pricing and Channel Strategy: The Importance of

Understanding Customer Chain Economics
If your company is a business-to-business supplier, most

likely its product(s) go to market via complex customer
chains to end users some distance from the manufacturing
dock. In these situations, the supplier inevitably loses
visibility and control on the price paid beyond the first
step in the distribution channel. When visibility and
control is limited, a successful pricing strategy is
dependent on understanding how you and your channel partners
can successfully win against your competitors and their
channel partners’ offer.
One way to gain greater insight into your pricing along the
customer chain is through analyzing customer chain
economics. Customer chain economics allow suppliers to
better understand the discounts and multipliers that need to
be in place at each stage along the customer chain,
including first and second step channel players. Creating
margin incentives that positively impact sales along the
customer chain can only be done after the economics are well
understood.
The following case studies demonstrate how customer chain
economics can inform pricing and channel strategies.
Know Which Customer Chains Matter
A leading packaging company wanted to focus on the right
market segments within the highly complex pharmaceutical
market to ensure future growth. Due to its capital-intensive
business, the client needed to choose which customers to
pursue and which countries to enter. However, it had no
insight into its revenue or profit potential across each
segment.
Customer chain economics were developed for different
countries, which clearly identified pro forma revenue
potential as well as the profit pools available along the
customer chain. As a result of understanding pricing along
the customer chain, the client was able to quickly identify
a more profitable segment, which was different from what it
originally believed. Following the money across a customer
chain map was an important driver of success.
Understand Where Value Really Lies
Customer chain economics also can reveal how relevant price
is to end customers. A supplier that served the appliance
industry wanted to raise its price for a $2.50 component,
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but could neither justify the price increase to its OEM

direct customers nor be sure that the proposed increase was
a price OEM buyers would be willing to pay. The customer
chain economics showed that the component price was
miniscule compared to the total bill of material for a
$1,200 unit. The end consumer’s total installed cost was
more than $6,000, which included not only the marked up end
customer price of the unit, but also the contractor’s
installation service and accessory materials. Furthermore,
our assessment showed that a significant portion of the
total installed price to the end customer was related to
installation time and materials.
This knowledge allowed the supplier to change its initial
price increase strategy and instead create a better value
proposition that focused less on the component’s cost and
more on the component’s promised value of solving reduced
installation time and improved reliability. This strategy
created value for the OEM who could sell more reliable
appliances as well as the contractor who could save on
installation time. Pricing of a $2.50 part, which rose
significantly on a percentage basis, became much less
important than the final value it delivered to the OEM,
contractors, and end customers.
Customer chain economics is a straightforward approach to
address many business issues, from quantifying market
potential to identifying growth opportunities, and to
navigating channel complexity. Understanding the economics
allows you to put proper emphasis on pricing and make more
informed decisions both to grow revenue and add value.
Source: https://bluecanyonpartners.com/pricing-and-channel-
strategy-the-importance-of-understanding-customer-chain-
economics/
References
Balttberg,R., Eppen, G., Lieberman, J., (1981) “ A

Theoretical and Empirical Evalautio of Price Deals for
Consumer Non-durables,” Journal of Marketing, pp. 116 -
129
Cross, J., Stephans, J., Benjamin, R. (1990), “Gray Markets:

A Legal Review and Public Policy Perspective,” Journal
of Public Policy and Marketing, pp. 183- 194

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Yan, R., (2008), “Pricing Strategy for Companies with Mixed

Online and Traditional Retailing Distribution Markets,”
Journal of Product and Brand Management, Vol 17 No.1
pp. 48 -56
Week 10

Topic: Promotions in the Marketing Channel
Importance of Push Strategy in Distribution
Learning Outcomes:
1. Discuss the relevance of promotions in the marketing
channel
2. Explain the importance of push strategy in
distribution
Promotions in the Marketing Channel
In marketing, the term promotion refers to all the

attracting communications activities used by business
and other entrepreneurial organizations. These include
advertising, personal selling, publicity, sales
promotion and all other related activities related to
business organizations promotional activities.
However, with the complexities in the promotional and
advertising activities of firms, the term integrated
marketing communications was used to refer to the
systematic use of several or all promotional tools in a
coordinated effort to achieve optimum promotional
impact (Shimp, 2010).
The promotions undertaken by producers and
manufacturers needs the help and support of channel
members to become successful since the products nd
services are not directly sold to the final end users
(Gu et al., 2010). Therefore, it can be said that the
effectiveness of the overall promotional strategy
depends on how successful the manufacturer is in
securing the cooperation from independent channel
members in implementing the promotional strategy (Bruce
et al., 2005)
The Push Strategy

It is a form of promotional strategy wherein the more
direct involvement of the manufacturer and channel
member is required to promote the product and services
to te target market. It s concept is to have a mutual
effort and cooperation between the manufacturer and
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channel members in the development and implementation

of promotional strategies (Glover, 1991)
The basic push promotion strategies in channel
distribution includes: 1) cooperative advertising; 2)
promotional allowances, 3) slotting fees, 4) display
and selling aids, 5) in-store promotions, 60 contest
and incentives, and 7) special deals and merchandising
campaigns
1) Cooperative advertising- it is the sharing of the
cost of advertising among large retailers. The most
common sharing is equal sharing of the cost. For
manufacturer, the effectiveness of cooperative
advertising as a promotional tool depends largely on
the level of support offered by the channel members.
2) Promotional allowances-It is offering a channel;
member a direct cash payment or a certain percentage
of the purchase on a particular product. The
allowances are offered to entice retailers to
purchase more of the manufacturer’s products, to
give the products more convenient shelf space to
feature the products in special floor or end of
aisle displays, or to engage in other promotional
activity (Rosenbloom, 2016)
3) Slotting fees or slotting allowances- are payments
ether in cash or merchandise by the manufacturer to
encourage channel member retailers to stock,
display, and support new products (Gundlach, 2005)
4) Displays and selling aids- these include all kinds
of special racks, shelving, platforms, signs,
promotion kit, and specially designed in-store
displays both large and small, including interactive
electronic devices used by the retailers to promote
the sale of products to customers while they are in
the stores. These displays are often referred to as
Point of Purchase (POP) displays.
5) In-store promotion events- these are short term
events designed to create added interest and
excitement for the manufacturer’s products
6) Contest and incentives- are sponsored by
manufacturers to encourage channel member to exert
some extra efforts to sell their products. However,
it is important to note that in the development of
any contest or incentive program, the manufacturer
should determine first the views of the channel
members toward such form of promotion in order to
avoid conflict of interest specially in the
attainment of the channel members objectives.
7) Special promotional deals and merchandising
campaigns.- these comprises a catch-all category> it
includes a variety of push type promotional deals
sucha as discounts to channel members to encourage
them to order more products, favourable offers to
consumers to foster larger purchases. Example, buy
one take one free, percentage or cents of offers,
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rebates, coupons prizes and premium offers. These

type of promotions are popular among groceries and
drug product categories as well as, in some consumer
electronic products.
Things to do:

activity
Date of Submission:
Things to do:
questions on channel marketing promotions at the end of
the week
1.1 What is integrated marketing communications?
the long-range essence of integrated marketing
communications to your organization and customer?

activity
References
Bruce, N., Desai, P., & Staelin, R. (2005), “The Better They
Are, the More They Give: Trade Promotions of Consumer
Durables,” Journal of Marketing Research, pp 54 -66
Glover, D., (1991), Distributor Attitudes toward

Manufacturer Sponsored Promotions,” Journal of the
Academy of Marketing Science, pp 168 – 169
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Gu, F., Kim, N., Tse, D., & Wang T, (2010), Managing
Distributors Changing Motivations Over the Course of
Joint Program,” Journal of Marketing, pp 32 – 47
Shimp, T., (2010), Advertising Promotion and other Aspects

of Integrated Marketing Communications 7th ed. Mason,
Ohio, South Western/Cengage Learning

Week 11
Topic: Other Types of Push Strategy

Logistics and Channel Management
Learning Outcomes:
1. Identify and explains the other forms of push strategy
2. Discuss the importance of logistics to channel
management
Other Types of Push Strategies
There are other types of push strategy which is less

aggressive in nature. Among them are: Training
programs, quota specification, missionary selling, and
trade shows.
1. Training programs are aimed to improve the
performance of channel member’s sales personnel.
Such programs can demonstrate a highly visible way
the manufacturer’s commitment in helping the
channel members in an area which they fell they
are weak and needs improvement.
2. Quota specification. Manufacturers set quotas in
the belief that they will encourage channel
members to exert effort in return for rewards
offered upon reaching or exceeding the quotas.
3. Missionary selling. It is an activity where
manufacturer’s sales people are sent specifically
to convince distributors that they should handle
the promotion of the manufacturer’s new product.
The manufacturer’s sales people supplement the
selling activities of the channel members
4. Trade shows are usually annual events organized by
associations in particular industries inorder to
exhib9it booth at which the firm displays its
products and presents its promotional message to
attendees as well as to representatives of the
media, who usually comes to trade shows.
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Logistics and Channel Management
In today’s global competition, the on time delivery of

products is a competitive advantage of a manufacturer.
Manufacturers need the services of a third party
logistic provider (3PLs). These firms specializes in
performing most or all of the logistical tasks that a
manufacturers or other channel members would normally
perform themselves
The basic components of a logistic system are:
transportation, materials handling order processing,
inventory control, warehousing, and packaging.
1) Transportation. It is the most fundamental and most
obvious important components of a logistic system.
From a logistics management standpoint, the most
important issue facing a firm is the choice of the
optimum mode of transportation to meet customer
service demands.
2) Materials handling. It encompasses the range of
activities and equipment involved in the placement
and movement of products in storage areas. The
issues of concerns in materials handling include how
to minimize the distances and shipping are moved
within the warehouse during the course of receiving,
storage, and shipping what kinds of mechanical
equipment should be used and how to make the best
use of labor when receiving, handling and shipping
products.
3) Order processing. Order processing is a key
component of logistics and developing efficient
order processing systems is an advantage. The
importance of order processing in logistics lie in
its relationship with order cycle time, which is the
time between when and an order is placed and when it
is received by the customer. If the order cycle is
slow and efficient, then it can slow down the order
cycle time. Routine order processing may actually be
the result of a great deal of planning, capital
investment and training people. It is a challenging
task if thousands of orders are filled up on time.
4) Inventory control. It refers to the firm’s attempt
to hold the lowest level of inventory that will
still enable it to meet customer demands. Ideally,
the firm wants to keep inventory at the lowest
possible level and at the same time place orders for
goods in large quantities because placing orders at
the lowest possible number enables the firm to
minimize ordering cost. Most firms make use of
Economic Order Quantity (EOQ) system to optimize
their inventory.
5) Warehousing. The warehousing or the storage
component of logistics is concerned with the holding
of products until they ready to be delivered or
sold. It is one of the most complex component of
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logistics considering the following complex

decisions to make: 1) the location of the warehouse
facilities, 2) the number of warehousing units, 3)
the size of units, 4) the design of units including
layout and internal systems , and 5) the question of
ownership. The warehouse location must be
strategically located and near potential customers
so it will not affect the delivery time needed to
reach the customers.
6) Packaging. It is also a relevant component of
logistics since packaging can affect the other
components of the system, and vice versa. Example,
the type of packaging can affect the type of
transport used and the packing cost. Therefore ,
packaging is very important in logistics since it
can make a very big difference in the effectiveness
and efficiency of the logistics system (Kotler,
2005)
Things to do:


activity
Date of Submission:
Rubric Used: Rubrics for Reflection Paper
Things to do:
logistics and channel management at the end of the week

activity
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Building a Supply Chain in One Week

When their client pivoted to make a low-cost, readily
available bed to quickly serve those on the front lines,
SEKO Logistics rapidly set up distribution operations to
meet urgent demand.
THE CHALLENGE
As the COVID-19 pandemic swept the country, overflowing ICUs
and bed shortages in hot spots strained the country's
already exhausted front-line responders. SEKO's dedication
to equipping, supporting, and inspiring came full circle as
they partnered with their long-time client to meet the needs
of caregivers and patients.
To aid with the unprecedented high demand for patient
platforms in the midst of the COVID-19 pandemic, SEKO's
client redefined their product offering to build a low-cost,
readily available bed to quickly serve those on the front
lines. Within seven days, a solution was designed and
sourced to allow emergency responders and caregivers to move
and position patients efficiently. However, a fast, reliable
logistics solution was imperative for effective
distribution.
THE SOLUTION
With ingenuity and collaboration, SEKO Logistics teamed up
with their client to build a new supply chain within one
week, and integrated it vertically for regional
manufacturing to meet the overwhelming demand. SEKO's MedTec
team worked hand in hand to deploy five regional forward
stocking locations in New Jersey, Texas, Indiana, Arizona,
and Pennsylvania.
SEKO sourced and managed the on-site Yard Jockeys at their
New Jersey distribution center to ensure successful
transport to and from the warehouses, distribution centers,
and hospitals.
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As Phase One's eight-week timeline progressed, SEKO

Logistics handled approximately 35,000 beds—supporting the
emergency need for hospital bed distribution as the COVID-19
pandemic overwhelmed the United States.
Now in Phase Two, SEKO manages the ongoing storage of the
additional 25,000 beds allocated for the support of specific
hospital systems.
As challenging times overwhelmed the globe, partnership,
teamwork, industry knowledge, and transparent communication
enabled SEKO Logistics and their client to accomplish this
amazing feat.
Source: https://www.inboundlogistics.com/
References
Kotler, P. (1988). Marketing Management Analysis, Planning,

Implementation, and Control. 6th ed. Englewood Cliffs.
N.J., Prentice Hall, p.71

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Week 12
Topic: Evaluating a Logistics Program

Evaluating a Channel Member’s Performance
Learning Outcomes:
1. Discuss the importance of evaluating logistics program
to channel management
2. Discuss the importance of evaluating channel member’s
performance
Evaluating a Logistics Program

A logistic program may be offered to channel members as
a separate entity or may be included as a major
component of the manufacturer’s overall approach for
supporting channel members need.
Inadequate evaluation of the logistic system can lead
to problems in business-to-business markets. This is
true in the case when so called” killer software apps”
high tech software for synchronizing the supply chain,
do not lived up to the expectations. So, regardless of
high teach is the logistic system, the channel manager
still needs to assess what can realistically be
expected as what might happen if something went wrong.
(Rosenbloom, 2016).
On the other hand, manufacturers must convince channel
members of the importance of logistic systems in their
distribution business. Manufacturers should stressed
that real importance of the logistic system will foster
such as: minimizing out of stock occurrence, reducing
channel member inventory requirements, and
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strengthening the manufacturer-channel member

relationship.
Evaluating Channel Member’s Performance

One of the most important aspects of channel management
is the evaluation of the channel member performance. It
can be said that the success to serve best its target
market is for the independent channel members to have
an effective and efficient performance.
There are four factors influencing the scope and
frequency of channel member performance and these are:
1) The degree of the manufacturer’s control over
the channel members. The degree of control a
manufacturer over its channel members plays a
dominant role in the scope and frequency of its
evaluation. The higher is the control, the
higher they can demand information from the
channel members as well as, having a large
leverage over the channel members and
manufacturers can easily make request from
them. In contrast, the manufacturer with less
control to its channel member must expect that
channel members will not give importance to the
manufacturer’s product
2) The relative importance of the channel members.
Evaluation is frequent and must be done
carefully if the manufacturers sells all it’s
product to intermediaries because the
intermediaries are the only one who provide
access to the company’s final markets.
3) The nature of the product. In most cases, the
more complex the product is, the wider is the
scope of evaluation. Example. The manufacturer
with a high volume product but of less unit
value needs little after sales servicing and
may just settle for routine sales data as basis
for evaluation and little evaluation is needed
on the channel members. On the other hand , a
channel who handles expensive and complex
product requires a high degree of after sales
service is likely to be examined by the
manufacture carefully with broader criteria
related to the gain or loss of a single order
4) The number of channel members involved. The
more number of channel members, the more likely
can conduct frequent evaluations. They might
just lightly look over current sales figures
except those channel members who sales output
seemed to be out of line or less performance..
Corrective actions therefore, should be taken for

channel members who do not meet the minimum
performance standards. In order to determine the
right corrective actions, the channel manager
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should try to identify channel member problems

that might be causing the performance problems and
try to help the channel member to solve such
problem
Title: One minute paper activity
Things to do:

understanding
activity
Title: Journal Critique
Date of Submission:
Things to do:
1. Students will be asked to make a journal critique on
evaluating channel members performance at the end of
the week

activity
Article
Channel Performance Measurement: A Close Overview

Channel performance measurement is a key activity when a
sales organization employs different types of channel
partners. In more complex multi-channel structures, it
becomes even more important due to the number of people,
processes, and roles involved. The performance of a channel
can be measured across multiple dimensions. The parameters
that are measured usually are effectiveness, efficiency,
productivity, equity and profitability of the channel.
The various channels have different purposes in the value

chain; however, each task needs to support the overall
corporate goals. As the number of channel partners
increases, it is difficult to ensure that the channel
partners are performing their specific roles as effectively
as required. For example, the goal of a business might be to
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increase the number of strategic accounts. However, in order

to gather maximum possible commission, channel partners
might be engaged in getting the maximum number of accounts
possible with total disregard towards prioritizing the
acquisition of strategic accounts. It is therefore important
to audit the channel partners and incentivize them for
activities that are aligned with the corporate goals. The
channel performance should also be judged on the ability to
fulfill given tasks. A few carefully chosen metrics can give
a good indication of the performance of each channel.
The channel performance measurement is primarily a four-step

process
1. Define Sales Objectives
The first step in channel performance measurement is to

define the sales objectives for the company. These
objectives are outlined and discussed
in sales meetings to ensure a shared understanding
between members of the marketing and sales teams.
2. Determine Channel Performance Metrics
Evaluating the performance of a distribution channel depends

largely on the agreed upon performance metrics. Choosing the
right number and type of performance metrics can help to
monitor and improve the performance of channel partners.
These metrics provide an understanding of how well the
channel partner is doing in reaching its performance
targets.
Though it is possible to evaluate a channel on hundreds of

performance metrics, this would make reporting and analysis
of the performance a cumbersome job. When determining
channel performance metrics, a key performance driver, such
as sales or units sold, should be chosen to identify and
measure the most important tasks. A series of performance
metrics are then decided based on the key performance
driver.
3. Set Channel Partner Targets
After overall sales objectives are defined, it is important

to assign specific targets to each of the channel partners
to ensure they are in alignment with the overall objectives.
Properly set targets provide a benchmark to measure channel
success, monitor performance, and take corrective action to
meet expectations. Each channel partner has a specific role
towards fulfilling the overall sales objectives. Performance
targets should be set to reflect the channel partner’s
contribution to the overall objectives
4. Manage Channel Performance
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This is the final step in channel performance measurement.

It uses the agreed upon goals, assigned performance targets,
and identified performance metrics to manage channel
performance on an on-going basis and to identify the
performance shortfalls of the channel partners. During this
step, management gains an understanding of the strengths and
weaknesses of each channel. Management can then take
corrective action to ensure efficient performance of the
channel.
The success of a channel and its efficiency are determined

by the efficiency of channel intermediaries in delivering
goods and services to customers and the quality of services
offered in the process. Developing a comprehensive marketing
plan that provides clear and concise direction about
marketing activities and strategy is critical to the
organization's success.
Source: https://www.smstudy.com
References

Week 13

Topic: Evaluating a Logistics Program
Evaluating a Channel Member’s Performance
Learning Outcomes:
1. Discuss the importance of evaluating logistics program
to channel management
2. Discuss the importance of evaluating channel member’s
performance
Technology, the Internet in particular, indeed has a

major influence on the design and management of
marketing channels. Shopping via internet is now very
popular and has become a mainstream marketing channel
as they become newest form of major channel choice
among consumers. The use of electronic marketing
channels is now a part in the distribution system and
has contributed to the success of many channels.
The Electronic Marketing Channels
Electronic marketing channels is defined as the use of

internet to make products and services available so the
target market with access to computers or other
enabling devices can shop and complete the transaction
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for purchase via interactive electronic means

(Rosenbloom, 2016)
The use of electronic marketing channels by online
shoppers has grown over the years as proven in the many
researches and studies conducted. It is still expected
to grow over the next years considering the increase in
figures among retail outlets.
The use of electronic marketing channels also has some
advantages and disadvantages. Among the identified
advantages of using the electronic marketing channel
are: 1) it has a high global scope and reach, 2) it is
more convenient and provides rapid transaction, 3)
efficient and flexible information processing, 4) it
has a data based management and relationship
capabilities, 5) it has a lower sales and distribution
cost.
Among the identified disadvantages of electronic
marketing are: 1) lack of contact with actual products
and delayed possession, 2) fulfilment logistics not at
internet speed and efficiency, 3) clutter on the
internet, and 4) non-purchase motives for shopping not
addressed.
The resurgence of electronic commerce has brought
implications for all major decision areas of marketing
channel strategy and management but it does not
fundamentally change the decision areas themselves.
However, it is important for the channel managers to
deal with the increasing complexity and new challenges
brought about by the new multichannel environment
intermediaries, such as having to compete directly with one’s vertical partners, must be
considered in a manufacturer’s overall channel management strategy.
THE INTERNET DISTRIBUTION MATRIX
Contrasting the three effects of technology vertically,

with the three basic functions of distribution channels
horizontally, permits the construction of a three-by-
three grid, which we call the Internet distribution
matrix. This is shown in Exhibit 1. It is a powerful
tool for managers who wish to identify opportunities
for using the Internet and the Web to improve or
change distribution strategy. It can also assist in the
identification of competitive threats by allowing
managers to concentrate on areas where competitors
might use technology to perform distribution functions
more effectively. Frequently, competition may not be
from acknowledged, existing competitors, but from
upstarts and from players in entirely different
industries Pitt, 2017).
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Exhibit 1.: The Internet distribution matrix
Each cell in the matrix in permits the identification

of an effect of technology on a distribution function.
So, for example, the manager is able to ask what effect
the death of distance will have on the function of re-
assortment and sorting, or what effect the irrelevance
of location will have on the activity of searching, in
his or her firm. In order to stimulate thought in this
regard, and to aid vicarious learning, we now offer a
number of examples of organizations using their Web
sites to exploit the effects of technology on
distribution functions. It should be pointed out that
neither the technological effects nor the distribution
functions are entirely discrete–that is, uniquely
identifiable in and of themselves. In other words, it
is not possible to say that a particular Web site is
only about the death of distance and not about time
homogenization, or location irrelevance. Nor is it
possible to say that, just because a Web site changes
re-assortment and sorting, it does not affect
routinization and searching. Like most complex
organizational phenomena, the forces all interact with
each other in reality, and so we have at best
succeeded, hopefully, in identifying cases that
illustrate interesting best practices, or a good
example, in each instance (Pitt, 2017).
Title: Three summaries activity
Things to do:

activity
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Date of Submission:
Things to do:
questions on electronic marketing channels at the end
of the week
1.1 Describe briefly the internet distribution matrix?

the long-range essence of the use electronic
marketing channel to your organization and
customer?

activity
References
Pitt, L (2017),”Distribution,” Simon Fraser University,

Canada. Retrieved August 15, 2020 from
https://opentextbc.ca/electroniccommerce/chapter/distri
bution/

Week 14

Topic: Franchise marketing Channels
Franchise Channel Structures
Learning Outcomes:
1. Discuss the concept of franchise marketing channels
2. Describe the franchise channel structures
The Franchise Marketing Channels
Franchise is a legal agreement between two independent

parties whereby one of those parties grants a license
to the other party to sell a trademarked product or
service.
The franchisor is the party who owns the trademarked
product and services while the franchisee is the party
which was granted the permit to sell the product or
service
Accordingly, there are two different types of
franchise: the product distribution franchise, and a
business format franchise.
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1. The product distribution franchise. It represents

the original concept of the description of a
franchise. That is, the franchisor licenses its
trademarked product or service to franchisees who
then have the right to sell the franchisor’s product
or service. In this type, the franchisor provides
relatively small support in terms of management and
marketing to the franchisees. It is most common
among car dealers and soft drinks distributors
2. The business format franchise. In this format, the
franchisor provides the complete system or format
for operating the business. This includes training,
marketing strategies, logos, promotion management
systems, financial control procedures, quality
control standards, and all others that are needed to
set and operate the business. There is a close
working relationship and frequent communication
between the two parties. Example Jollibee, 7/11
stores
The franchise fee is typically a one -time flat fee
paid by the franchisee to the franchisor usually when
the franchisee signs the franchise contract. The
franchise fee does not involve payment for physical
assets needed for operate the franchise and is only
regarded as a fee to “pay a play” to compensate the
franchisor for providing the franchisee the right use
the franchisor’s business model
The royalty fee is a regular and continuous payment
required by the franchisor during the effectivity of
their contract. Usually this is set by the franchisor
based on the a percentage of the franchisor’s gross
sales or in some cases is based on a fixed amount of
money paid by the franchisee to franchisor regardless
of sales
Franchise Channel Structures

Franchise channel structures can be done in two ways:
single unit-franchise, and multi-unit franchise
1. The single unit franchise involves the franchisor
granting the franchisee the right to own and operate
one unit. This is the most common and simplest form
of franchising channel structure.
2. The multi unit franchise involves the franchisor
granting the franchisee the right to own and operate
more than one unit at the beginning of the
relationship. This type can be achieve through area
development franchise or through master franchise
agreement (Doherty & Alexander, 2006). In an area
development franchise, the franchisee is the granted
the right to open more than one unit during a
certain period of time and within a specific
geographic area. In the case of master franchise
agreement, the master franchisee also is given the
right to sell franchises to prospective franchisees
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in the defined territory who then will be called as

sub franchisees. The master franchisee normally
assumes the tasks normally provided by the
franchisor such s providing training and management
assistance.
Title: One Minute paper activity
Things to do:

understanding

activity
Date of Submission:
Things to do:
franchise marketing channels at the end of the week
1.1 What is customer relationship management?
1.2 Discuss briefly the evolution of customer
relationship management (CRM)
1.3 As a future service manager, what do you think is
the long-range essence of customer relationship
management to your organization and customer?

activity
How Franchising Works and Why Businesses Use the Channel

Christopher Conner Follow
| Tuesday, 14 March 2017 12:48 (EST)
Via Daniel Barcelona
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From a business owner’s perspective, the idea of franchising

a business model is many times kicked around the boardroom
as an idea to scale the brand and expand the business with
less capital and vested franchisees. The concept sounds
appealing to many for obvious reasons, and certainly anyone
can point to hundreds of successful franchise brands that
have leveraged the model and scaled into markets around the
world. How does the model work and why does it have the
potential for growth beyond other expansion channels?
First, it is important to understand that in franchising, a
franchisee is paying a royalty on sales for the right to use
the name, business system and intellectual property of the
franchisor. If you compare a single unit of a franchise to
that of a successful company owned location, the company
owned location will have a higher dollar profit and volume,
which is realized by the business. Franchising is about
volume and decreased risk to the franchisor, not maximizing
profitability on each operating unit. With this in mind, for
the franchise channel to make sense for a brand, there needs
to be relatively significant growth associated with the
decision.
The franchise model probably won’t make sense if we are
targeting ten new unit openings, but when the target is 50,
100 or 1,000, the franchise channel carries a great deal of
logic. When opening new units as a franchise, the franchisor
does not bear the expense of the new locations, the cost of
recruitment, management, oversight and other local market
expenses associated with establishing new businesses in new
markets… the franchisees are responsible for this. As a
result, franchising is a much leaner, low overhead and
flexible business strategy than traditional company owned
growth.
The Basics of the Franchise Mode

A franchisee pays a franchisor a franchise fee for the
rights to operate either an individual unit of the
franchised business. This fee ranges from $15,000 up to
$75,000 depending on the brand, business model and market
segment and is paid strictly for intellectual property,
training and initial start-up costs to the franchisor to
support the new unit opening. In this transaction, the
franchisee owns 100% of the business and has responsibility
for managing, operating and financing the new location, they
are tied to the franchisor’s brand and standards through the
franchise agreement. The franchisor helps the franchisee
find a location, establish the business and get the location
ready to open. This includes corporate training at the
franchisor’s operations, training at the franchisee’s
location and initial support to help get the business up and
running in an efficient time period.
Once the franchisee is open and operating, a royalty fee is
paid to the franchisor, generally of 5-10% of gross sales
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paid on a weekly or monthly basis. In addition, franchisees

will usually be responsible for paying an advertising fee
along with royalties of 1-3% of gross sales, which are part
of a contribution to a larger pool of advertising dollars
that can then be used to promote the brand and build
exposure for the entire network. The franchisor’s ongoing
focus as the system matures becomes finding ways to add
value to the relationship, provide innovative ways to
improve the business model and help franchisees increase
their bottom line and build a brand that adds valuation to
each franchisee’s business and assets.
The Franchise Model in Practice

There are many brands and industries that have been defined
by franchising. The franchise industry is well beyond proof
of concept, but there are cases where the model has been
used exceptionally well and efficiently. For example, the
rental car industry has franchised with amazing success.
Brands like Avis (CAR), Hertz (HTZ) and Dollar all built
their global networks through franchise investment and were
able to leverage local market knowledge and investment from
franchise operators. Certainly, the restaurant and food
service market has made the headlines for franchising with
global brands in Chicken, Burgers, Ice Cream and virtually
anything else you eat, established brands like Kentucky
Fried Chicken (YUM), Jollibee in the Philippines, Subway and
others have expanded at a ferocious pace with the franchise
channel.
Other market segments like Hotels, Financial Services, Tax
planning and retail have all had amazing success in
franchising. The big mature brands are obvious, but what
about the small, startup franchisors who have recently
transitioned to franchising as a way to scale. Zoup! is a
soup specific franchise system that had three locations for
years in the Michigan market and at one point realized they
were not able to expand at the pace they desired. The
business franchised in the mid-2000’s and over an almost
ten-year time period has been able to expand to 115 units
across the Midwest and Eastern United States. Although the
brand is not nationally-known or considered a leader in the
food service market, they have been able to increase their
market valuation by an exponential percentage rate and with
even modest unit growth will continue to build an asset
value worth a great deal. The franchise concept has allowed
Zoup leadership to get out of the operating business and
focus on the strategic initiatives inherent in franchise
expansion. Franchising has helped Zoup to transition from a
“unscalable” business to one that is scalable, allowing for
rapid growth.
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Reference

Week 15

Topic: Rationale behind Franchise marketing Channels
Essential Elements of a Franchise Marketing
Strategy
Learning Outcomes:
1. Analyze and explain the rationale behind franchise
marketing channels
2. Discuss the essential elements of a franchise
marketing strategy
The Rationale behind Franchise Marketing Channels
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There are three major reasons why there is a need

for distributing via franchise channels: 1) capital
advantages, potential to reduce distribution costs,
and 3) the possible high level of managerial
motivation brought about by franchising (McGuire,
1971; Rosenbloom 2016)
1) Capital advantage. It is cited as the main reason
for going into franchised distribution. The
acquisition of funds through franchising is much
easier than does equity financing through the sale
of securities to the public. Also, it does not
create indebtedness attendant to borrowing which
may be heavy for the firm to carry.
2) Reduced distribution cost. The potential for
franchising to reduce distribution cost is
particularly important for the firm whose main
channel alternative consists of establishing its
own branch unit or stores. If it is the case,
then the firm may have high fixed overhead costs
regardless of the firm’s sales volume. By using
franchised distribution, then members would assume
much of this overhead cost and would also pay for
the right to market the firm’s product or services
3) Managerial motivation. . The franchisees as
independent business people needs to work hard at
developing their markets. It implies that
franchisee is more motivated to work more than
salaried employees do because of his self image as
a local businessperson who is important in the
community.
Overall, the perspective of potential franchisee is
that: first, the amount of uncertainty involved is
reduced with a franchise, second, the franchisor offers
a well known trademarked product or service which may
have a high level of customer acceptance, and third,
many franchisors often offer initial and continuing
assistance, operating manuals and many others
However, there are also some potential downsides to a
franchise channels. For the franchisor, these include:
1) limited flexibility, 2) high franchisee
expectations, and 3) increased regulatory scrutiny. The
downsides for the franchisee include: limited
independence, 2) continuous royalty payments to the
franchisor, and 3) a positive negative halo effect.
Essential Elements of a Franchise Marketing Strategy
Competition for customers is fiercer than ever, but a

well-planned franchise marketing strategy can make you
stand out from the crowd. Here are the elements of a
franchise marketing strategy (Bindea & Madsen, 2018)
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1. Segment your audience if you want to maximize your

results
This applies whether you're a franchisor looking for

franchise buyers or a franchisee who wants to
attract more people to your business. If you want to
make the most of your marketing efforts, your
marketing plans have to start with your core
audience in mind.
Questions to ask yourself & your team:
 What are your product/service's best features, and

how does each translate into a benefit for the
consumer?
 What's special about your product/service in
comparison to your competition? Are you unique,
cheaper, quicker, better value, safer? The most
trusted, the first, the oldest, the most tested?
 What could be your customer's main objections?
 Which topics are your customers interested in? Who
influences your ideal client (books, publications,
media, influencers, etc.)?
 Where can you catch your ideal customer's
attention? Phone, email, social media, TV?
 What is your ideal buyer's income?
Questions to ask your existing customers:
 Why did you choose us and not a competitor? Is

there anything that pushed you in favor of us?
 How did you find our website or location?
 How would you feel if you could no longer use us?
What would you miss?
 What's one thing you don't like about a
competitor, or that we could improve to better
meet your needs?
 What would you likely use as an alternative if we
were no longer available?
 Have you recommended us to anyone? Why or why not?
2. Prioritize channels
One of the biggest mistakes entrepreneurs make is

trying to be on every platform out there. Marketers
must prioritize channels that are available if:
1. You have the resources to do this (time + money +

knowledge).
2. Your audience is on every platform.
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The first point is pretty clear. Few companies have

the resources to go that broad with their marketing
efforts.
Second, often times, our audience isn't everywhere.

For example, if your target audience is between 18
to 25 years old, you might be better off going for
Instagram than Facebook. Or, if you want to use
Twitter as one of your main marketing channels in
Europe, you might reconsider because Twitter hasn't
penetrated Europe as much (e-Statista, 2018)
There are a lot of effective channels available. How do

you prioritize them?
Below is a simple, tested system borrowed from growth
hacking marketing you can use. This is the same
marketing concept used by startups like Facebook,
Twitter, LinkedIn & Airbnb:
Source: GrowthHackers
Cost — how much you expect to spend on that

particular channel (check cost statistics
beforehand).
Targeting — how easy it is to reach your intended
audience and how specific you can be. Does your
chosen platform/channel have local advertising
capabilities, for example?
Control — how much control you have once you go
live. Can you stop it easily or adjust if it's not
going well? For example, it's much harder to
change a billboard than a Facebook ad.
Input time — how much time it will take to launch
the experiment. Filming a television ad, for
example, has a much longer input time than setting
up a promoted tweet.
Output time — how long it will take to get results
once it's live. For example, search engine
optimization (SEO) could be a great channel for
your franchise marketing, but it has a much longer
output time than pay-per-click does.
Scale — is how large an audience you can reach
with the experiment. Television offers much larger
scale than advertising on a niche blog does.
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3. Make sure you maintain consistent branding
Different channels require different creative.

Twitter is more text-based because people use it for
news and articles. Instagram is a more visual
platform and requires high-resolution photos.
Therefore, no matter if you are a franchisor or a
franchisee, you have to make sure you:
1. Maintain consistent branding across all your
franchises (as a franchisor).
2. Maintain consistent branding across all your
channels (as a franchisee).
4. Before starting your efforts, make sure you can

measure them
 There's an old adage that says half of the money

invested in marketing is wasted. The problem is
you don't know which half.
 Well, thanks to digital analytics, you can track
your results so in-depth that you'd be amazed at
how much leverage you have. if you measure the
right things.
 Here are just a couple of examples. Let's say your
marketing team developed two or three video
messages for a certain audience, but you don't
know which one to choose.
 It's super easy. On Facebook, for example, you can
check how much of your video was actually watched
by a particular group.
 If you compare it to television advertising, for
example, you don't get this level
of accurate data. You can't know whether a person
left the room when the commercial started.
 But, Facebook isn't the only tool that allows you
to track the results of your franchise advertising
efforts.
 If you run email marketing campaigns, you can see
how many people opened your email and clicked on
the offer inside.
 If you run any other digital marketing campaigns,
you can check Google Analytics to see how much
time people spend on your website, which campaign
brought in the best results, where the most
traffic comes from, and much more
5. Coordinate local & national franchise marketing
 There are many methods to handle franchise

marketing. Sometimes, the franchisor and a
corporate marketing team are wholly in charge.
Other times, the franchisee takes on all marketing
responsibilities. Most often, it's a mix of the
two.
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 It's easy to see how this arrangement could cause

confusion for your customers. But by coordinating
your marketing efforts, your brand message will be
strong and clear across all franchise locations.
6. Key takeaway
 Marketing within a franchise can lead to

miscommunication and overlap if the franchisor and
franchisee do not coordinate their efforts.
However, through communication and a good brand
management system, your marketing efforts can
complement one another and culminate in more
success.
Things to do:

activity
Title: Journal critique
Date of Submission:
Rubric Used: Rubrics for journal critique
Things to do:
1. Students will be asked to make a journal critique at
the end of the week

activity
Article
The Do's and Don'ts of Franchise Marketing
Innovation Enterprise
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Franchise marketing can be a huge advantage if done

correctly but can hurt a business if done incorrectly
The expansion of a business using the franchise model can

turn a small business into a household name in a matter of
years. Most people tend to think about restaurants opening
up new franchises and expanding across the country. Gyms are
another that have been extremely successful expanding
through the franchise model. Marketing for the original
location can be difficult as regional differences can impact
the ROI of a marketing campaign. The marketing also has to
focus on getting others to invest in a franchise of their
own in order to maximize quality expansion.
We look at some of the do's and don'ts of franchise

marketing.
Understand regional differences
Franchise marketing strategies need to be changed even when

venturing domestically. The same marketing ploy that works
in Seattle might not work in a more conservative city like
Houston. A fast food restaurant would want to market a
healthier option on the menu for a location that have a more
health conscious demographic. While national campaigns are
unlikely to be changed for one location the person opening
the franchise could be a huge resource. This person
understands the market and could even help come up with
promotions that help improve the community's view of the new
franchise opening.
Regardless of the business that is being run it is important
to stay away from hot topic issues when marketing. Politics
is the number one thing to avoid in any marketing campaign
as it can alienate a huge part of the customer demographic.
Boycotts are not as uncommon as many business owners might
think and this can permanently ruin profitability for a
location if not handled sensitively.
Understanding international differences

There can be a resistance to a company from abroad expanding
to certain countries. This is not the time to ram marketing
tactics down their throats but rather to humanize the
company. If the local consumers can put a face to the
company, it makes the company look less like a heartless
corporate entity and more like a business of likable people.
Running a community cleanup or sponsoring a charity event
can go a long way in certain locations. Depending on the
location this can cost very little when compared to doing
the same thing domestically.
Do not for any reason think that the same marketing tactics
are going to work in a completely different country. The
first thing that needs to be done is starting a digital
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marketing campaign in the native language of the local area.

All over the world consumers flock to search engines to find
services or products that they will need. Going to the third
page of search results is not common so placing yourself on
the first page could be the difference between a quick or
slow start at the new franchise.
Edgy social media content in a specific country might be
able to draw customers while it can be frowned upon
elsewhere. Do the appropriate research to know what works
and what does not. Enlisting the help of a marketing company
abroad can give the new franchise an idea of how they should
approach marketing in their new location.
Create a buzz before the new franchise opens

One of the most important things that a business opening a
new franchise can do is create a buzz in the local area.
There is a chance that the business has zero name
recognition in the area so establishing this early is
important. Depending on the size of the city that a new
franchise is being established press releases can be a huge
help. The demand for a new franchise can also be a huge
driving force as something like In N Out Burger coming to a
city on the east coast would create a buzz in itself.
Getting into local publications about the opening should not
be difficult as local newspapers often times announce new
business openings.
The last thing that a company wants to do when marketing a
new franchise is annoy the local community before the
location even opens. Make the local community aware without
it being the only thing they hear on the radio or on
television. Social media can also be tricky as a company
does not want their social media feeds seeming like
commercial rather than producing quality content and
engaging with current/potential followers.
Rely on data to help shape future campaigns

Do use data from market research companies or other
franchises opened to help shape the franchise marketing
strategy. Try to find the best marketing tools available
that help track the ROI on a specific marketing tactic. Try
changing one aspect at a time so the change can be tracked
instead of making multiple changes which makes it tough to
figure out which change made the largest improvement.
Do not try to use the data to make every decision as not all
openings will be the same. This can be used as a guide but
taking out the human element of marketing can be a large
waste of marketing budget. You also want to market opening a
franchise to the right demographic as great franchisees can
do huge things in a local area. Often times you see a
successful owner of a franchise expanding further in the
area if there's a large enough demand. Make information
available on how to franchise in an easy to read way as it
could attract far more interest than telling potential
franchisees to call to get more information.
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Connect with the local community

The connection with the local community when opening a
business in a tight knit one like that of the city of Tampa
is important and can yield in far more customers. Sponsoring
events is one way to do this but there are also things like
military appreciation day that can be done weekly due to the
proximity of MacDill Air Force Base located in the city.
Don't downplay opening the newest franchise even if it is in
a far smaller market than the original location. Prices need
to be adjusted as well as the cost of living is different
throughout the country. Market this as a place that
understands that having a huge budget for something is not
always an option for many consumers.
Brand consistency can't be undervalued

Establishing a brand is tough work and it can take a company
years to establish a brand built on delivering quality
products/services to all its customers.
"Franchisors who are able to grow their networks effectively
typically have incredibly strong and consistent mechanisms
in place to monitor, respond and execute brand management
responsibilities," advises Chris Conner, president of
Franchise Marketing Systems.
So, to achieve success, take the time to establish that same
strong brand in the new location whether it stress customer
service or quality products. The digital marketing that you
have done in the past can help with the local rankings with
a little local SEO work.
Don't undermine the brand as this is the one thing that is
most important to keep healthy. A brand's name being pulled
through the mud can impact sales nationwide and can be
extremely detrimental in one area near the franchises not
pulling their weight. The old days were full of corporate
training videos that tend to be outdated in a couple of
years. Online training can be very effective especially if
the material covered is tested at the end of the training.
Reuse graphics, flyers, and other already designed marketing

materials
The cost of starting a franchise can be extremely expensive

for certain individuals just starting out. Allowing them to
reuse designed marketing materials can help them save as far
as costs go. Not only is this budget friendly but it can
also help to create a good rapport between the franchisee
and the corporate offices. The last thing the brand wants is
poorly printed flyers for the business which reflect on the
business in a negative fashion.
For example, a branch opened in Arizona could possibly use
the same marketing materials as another southwestern state.
Reusing the same marketing materials for differing locations
like Salt Lake City and San Francisco could alienate the
customer demographic you are trying to appeal to. The
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website design of another location can be used as well as

long as the copy is custom to the new location.
Monitor rogue franchises as they can create a disaster

As mentioned briefly above rogue franchises can do a lot
more harm than good. Mistreatment of employees is one of
these things that the entire brand will suffer from one
manager going on a power trip. Random visits from corporate
are necessary as those visiting will be able to see if the
high standards of the brand are being incorporated into
daily production.
The most important thing to monitor when expanding
franchises overseas is working conditions. Even some of the
largest corporations in the world have come under fire due
to the way workers are treated at locations internationally.
Local SEO is imperative

Local SEO is digital marketing that targets a specific area
which is perfect for a new franchise. While the franchise
might rank for certain terms they might not for ones in the
designated area. Updating a local Google listing might seem
like a pain but it can make a huge difference in being
listed with other related businesses as, according to
Hubspot, 72% of consumers who search for local businesses
end up visiting stores within five miles.
Reaching out to local publications can help the new

franchise get ahead of the game as these publications will
rank high locally. Even something as simple as an
announcement on a few local newspaper websites can build
enough backlinks to have the franchise ranking in a matter
of weeks. This is going to be run by the local franchise so
make sure they understand what type of content is consistent
with the brand. Marketing training being a part of opening a
franchise is not uncommon for that very reason.
Creating franchise specific social media accounts can be a
huge help as well as this will help with customer service.
People are not going to call a fast food restaurant to
complain as a manager might not be on duty. Social media is
where people flock to complain as it is public so monitoring
these things can help retain customers and attract new ones
with the dedication shown to the existing customers. This is
where a franchise should put a trusted employee on the
accounts as a wild employee could reply rudely to a customer
for all the followers to see.
Social media can be a great place to announce promotions and
daily deals if this applies to the franchise. Social media
contests for gyms are quite popular with plenty of people
interacting in hopes of winning a free month or two of
membership. Building a sense of community among followers is
the best thing that can be done as followers could check the
account to see the banter between the franchise and longtime
customers.
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Create ways to generate email marketing lists

The contact page leads and people that previously have been
in touch with the business are the perfect place to start
building a bulk email marketing list.
Email marketing is an incredibly effective form of
marketing, with 58% of millennials saying email is their
preferred way to be contacted by a brand according to Adobe
and with McKinsey claiming that email is 40x more effective
at acquiring new customers than Facebook or Twitter.
For those that attend industry conferences getting the
contact info through business cards can work on a small
level. Certain businesses have visitors leave business cards
in a fishbowl with the hopes of winning something. These can
be used after the drawing to build the email list as well as
these bowls fill up quite quickly as most people in business
carry around a card of some sort. The key is to not email
too frequently as the recipients will quickly unsubscribe
from the email list if the business sends daily or multiple
emails per day. The email can be used as a weekly newsletter
as well so there is substance to the email rather than
'Today would be a good day to visit XYZ for a great deal'
which is plainly advertorial.
Final thoughts
There are plenty of things to worry about when trying to
grow a business using the franchise model. Marketing needs
to be done with care as a failed location reflects poorly on
the brand regardless if it was a rogue franchisee that
disregarded everything corporate had told them to do.
Marketing is the lifeblood of growing a franchise business
as there is a possibility of hundreds of marketing campaigns
going on at once.
Source:
https://channels.theinnovationenterprise.com/articles/the-dos-
and-don-ts-of-franchise-marketing
References
Bindea, P., & Madsen, “Essential elements of a

K., (2017)
franchise marketing strategy” retrieved August 15, 2020
from https://www.lucidpress.com/blog/essential-
elements-franchise-marketing-strategy
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Week 16
Unit 6: Channel Marketing for Services and Distribution Plan

Topic: Special Characteristics of Services
International Channel Perspectives
The International Channel Management Environment
Motivating International Channel Members
Learning Outcomes:
1. Discuss special characteristics of services
2. Describe international channel perspectives
3. Describe the international channel management
environment
4. Discuss motivating international channel members
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The range of services used by consumers is incredibly

different ranging from hotel services to many others.
With the given growing importance of services,
marketing firms are not
Special Characteristics of Services

There are five characteristics that differentiate
services from products and these are the following:
1) Intangibility of services. In general, services are
much less tangible than physical products. Services
are unnoticed by consumers do not have the same
degree of tangibility as compared to products.
Marketers therefore need to be more imaginative in
order to successfully differentiate their service
from their competitors services.
2) Inseparability of services. Most services are
inextricably tied to the providers of the service,
and the services produced do not exist as physical
entities in and of themselves. Thus direct services
rendered by professionals are results of their
training and skills. The work cannot be separated
from the person providing the service. In the case
of channel distributions, the inseparability of
services from the provider means that if the channel
does not do its job well, then the service will not
be received well by the customers
3) Difficulty of standardization. In production of
services, achieving the levels of standardization is
difficult as compared to standardization in
products. The variability associated with human
element is much more likely to sneak into production
of services than in the production of products. In
fact, it can be said that a person providing the
same service may show different level of performance
from services rendered, one after the other. In case
of channel distribution, services rendered by
franchisors outlets may also show different
performance or there might be some level of
inconsistencies in the performance of the outlets
4) Customer involvement in services. Consumer’s
involvement in the production of services is often
greater than for a product. Consumers have more
direct participation in the services since consumers
have to put inputs of information to the provider
before the service provider can perform. Example is
when you go to a doctor for check up, you have to
discuss with your doctor of what you are feeling and
the reasons why you need a check up before the
doctor will perform his tasks. Therefore, a channel
designed to provide services requiring customer
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input must try to facilitate more customer

involvement
5) Perishability of services. Services are not
perishable as compared to the tangible products like
fruits and vegetables, However, in terms of salvage
value, salvage value for products is higher than
salvage value of a service> Example. Fruits can be
stored for several days and may have salvage value
but unsold concert tickets have zero salvaged value,
this salvage value for unsold service is zero. In
case of channel distribution, the channel should be
designed to maximize the sale of service during its
limited exposure to the target market.
Along with the generally recognized characteristics of
services, the channel manager must also be acquainted
with the other important characteristics of services
such as: implications to channel management of shorter
channels, the widespread use of franchising, the
relatively high degree of customization in many
services and the lack of product flow from services
(Rosenbloom, 2016)
International Channel Perspectives

Channel strategy as one of the vital elements of the
marketing mix needs to focus on the international
aspects of channel management so as to keep them aware
of the developments in international channel markets.
Channel managers should address the firm’s marketing
channels if they would go into international markets.
To develop and manage channels successfully in
international environment, the channel manager needs to
be aware of, and sensitive to the environmental
differences between countries involved and how thses
differences influence channel strategy (Gelb & Yujuico,
2010)
The International Channel Management Environment

 Economic factors and international channels. It
should be noted that all economic condition in
domestic setting can also happen in foreign
environments as well, and the changes may be more
remarkable. . These economic variables may bring
effect to all elements of the marketing mix,
foreign channel strategy therefore may bring some
problems especially in the aspects of foreign
relationship which might be affected (Roberts,
2008)
 Competitive environment and international
channels. Competitive structure differs from
one’s country to another. The free market
experienced by you in your own country might be
less evident in other countries. Channel
structure therefore, needs to adapt to the
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differences in competitive structures among

different countries.
 Socio-cultural environment and international
channels. Differences in socio-cultural factors
across countries are also important in the
management of international channels (Ahmed &
Motawa, 1997). Cultural values, norms of
behaviour, attitudes, and perception differ from
every country. Hence, channel manager must be
extra careful to pay attention to socio-cultural
differences in the development of international
channels.
 Technological environment and international
channels. The level of technology adopted by each
country is another factor affecting international
channel management. Channel managers must be
ready to meet the technological demands required
by retail giants so that these retail giants will
support your products on the international front.
 Legal/political environment and international
channels. Different countries have different
forms of legal procedures that can also bring
influence to operating international channels.
Countries across the globe have their own
government regulations, policies, and political
pressures that channel managers has to be aware
of and to follow in their quest for international
distribution. Therefore, there is a need for
channel managers to examine the legal environment
carefully in each country before establishing
channels.
Motivating International Channel Members

The motivational approaches to be undertaken in local
and international context are similar in nature. In
motivation international channel members, manufacturers
must first find out the needs and problems of the
foreign channel members and help these channel members
in solving the problem. Second is to provide support to
the foreign channel members where there is a need for
collaborative support for activities to be conducted
like promotional activities, financial assistance and
other channel marketing related activities. Lastly, is
leading the foreign marketing channels. Although
manufacturers face some difficulties in making control
measures among foreign channel members due to
differences in socio-cultural factors and legal
procedures, the manufacturers must exert but careful
leadership control over their foreign channel members
without affecting their country’s culture and legal
procedures.
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Title: Three Summaries activity

Things to do:

activity
Date of Submission:
Things to do:
questions on marketing channel for services at the end
of the week
1.1 How will you differentiate the marketing channel
for services as compared to product channel
market?
1.2 Discuss briefly the international channel
management environment?
1.3 As a future service channel manager, what do you
think is the long-range importance of motivating
international channel members to your
organization?

activity
Weeks 17-18
Unit 6: Channel Marketing for Services and Distribution Plan
Topic: The Components of Distribution Plan
Learning Outcomes:
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1. Discuss the components of distribution plan

2. Develop a simple distribution plan
The Distribution Plan
It takes time, money, and lots of preparation for a

company to conduct channel marketing. One of the best
ways for the company to prepare is to develop a solid
distribution plan. A strong distribution plan will
ensure the company not only sticking to their schedule,
but also seeing that the company is spending their
channel marketing funds wisely and appropriately
A distribution plan is a business document written for
the purpose of describing the current market
distribution position of a business and
its distribution strategy for the period covered by the
plan. Distribution plan usually has a life of from one
to five years (Duermver, 2012). The purpose of creating
a distribution plan is to clearly show what steps will
be undertaken to achieve the business' distribution
objectives. The distribution plan outlines specific
actions that you will take to distribute your product
or service potential customers. These actions work to
persuade these potential customers to purchase your
products or services. It serves as a "roadmap" that
will provide you with detailed directions on how to
reach your marketing and distribution goals (Lake,
2019).
The distribution plan should include the following

(Lake, 2019):
1. Summary and Introduction
The summary and introduction is a quick overview of the

main points of the plan. It should be a synopsis of
what you have done, what you plan to do, and how you
are going to get there.
2. Distribution Marketing Objectives
This section will define your distribution marketing

objectives. These objectives should be based on
understanding your strengths and weaknesses, and the
business environment in which you operate in. They
should also be linked to your overall business
strategy. It's not uncommon and is often beneficial to
focus on specific targeted segments that you will be
marketing to.
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3. Situation Analysis
Your situation analysis details the context for your

distribution efforts. In this section you will take a
close look at the internal and external factors that
will influence your distribution strategy, this is
called a SWOT analysis. A SWOT analysis combines the
external and internal analysis to summarize your
Strengths, Weaknesses, Opportunities and Threats.
4. Target Markets
The concept of target markets is one of the most basic,

yet most important aspects of service marketing. There
is no such thing as a "one message" fits all marketing
message. It is unrealistic to think that you can
attract everyone. Defining your target market or
segmenting your market helps you decide where to commit
resources and what kinds of promotional methods and
messages to use.
5. Strategies
Strategies are action steps that detail how the

distribution marketing variables of product, price,
place and promotion are used to attain the distribution
marketing plan’s objectives and overall strategies.
6. Tracking and Evaluation
This section of your plan should include plans and

procedures for tracking each type of distribution
activity you are using. Tracking helps monitor the
effectiveness of each distribution activity and is
especially helpful with your overall program
evaluation. If you are not tracking you are not
marketing and distributing.
Title: My Marketing Plan
Things to do:
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understanding
activity
Title: Presentation of New Product Distribution Plan
Date of Submission:
Rubric Used: Rubrics for Marketing plan
Things to do:
1. Students are asked to present a simple new

distribution plan at the end of the course
2. Write your answers on the worksheet provided for

tReference
Lake, L., (2019), Strategic Marketing Plan Components and

Benefits, Retrieved July 12, 2020 from
https://www.thebalancesmb.com/what-is-strategic-
marketing-plan-4043393
APPENDICES
Rubric for Student Reflections Writing
Above Meets Approaching Below

Expectations Expectations Expectations Expectations
4 3 2 1
Reflective The reflection The reflection The reflection The reflection

Thinking explains the explains the attempts to does not
student’s own student’s demonstrate address the
thinking and thinking about thinking about student’s
learning his/her own learning but thinking
processes, as learning is vague and/or
well as processes. and/or unclear learning.
implications about the
for future personal
learning learning
process..
Analysis The reflection The reflection The reflection The reflection

is an in-depth is an analysis attempts to does not move
analysis of of the analyze the beyond a
the learning learning learning description of
experience, experience and experience but the learning
the value of the value of the value of experience.
the derived the derived the learning
learning to learning to to the student
self or self or or others is
others, and others. vague and/or
100
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the unclear.
enhancement of
the student’s
appreciation
for the
discipline.
The reflection The reflection The reflection The reflection
Making is an in-depth is an analysis attempts to does not move
Connections analysis of of the analyze the beyond a
the learning learning learning description of
experience, experience and experience but the learning
the value of the value of the value of experience.
the derived the derived the learning
learning to learning to to the student
self or self or or others is
others, and others. vague and/or
the unclear.
enhancement of
the student’s
appreciation
for the
discipline.
Retrieved from earlycollegeconference.org
Case Analysis Rubrics
ASSESSMENT Indicators for Level of Performance
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CRITERIA
Contents and Needs Poin Remar

Knowledge Excellent Good Fair Improvemen ts ks
(100%) (91 - 100) (81 -90) (71 - 80) t Earn
(51 - 70) ed
1. Summary Facts of Facts of Facts of Facts of

/ Facts the case the case the case the case
of the very clearly not not very
Case clearly stated. clearly clearly
stated. Gives many stated. stated.
Concise informatio Gives only Very
(5%) lead into n of the few Minimal
the case case study informatio informatio
study n n was
derived
2. Problem Problem Problem Problem Problem

Statement statement statement statement statement
/ is very is clearly is not not very
Objective clearly stated: clearly clearly
s of the stated; Objectives stated; stated;
Study Objectives highly Objectives Objectives
very attainable not so not
(15%) highly attainable attainable
attainable . at all
3. Areas Very Highly Partly Not so

of highly identified identified identified
Consideratio identified and and was and not so
n and was clearly somewhat explained
very explained explained in details
(20%) clearly in details in details
explained
in details
4. Details of Details of Details of Details of

Alternati actions actions actions actions
ve are very are well are partly are hardly
Courses well explained explained explained
of Action explained and and and
and presented presented presented
(20%) presented
5. Very Appropriat Somewhat Not so

Conclusion appropriat ely drawn. appropriat appropriat
ely drawn. Most ely drawn. ely drawn.
All positions Some Only few
positions were well positions positions
(20%) were very establishe were establishe
well d partly d
establishe establishe
d d
6. Very well Well Somewhat Not

Recommendati establishe establishe establishe establishe
ons d based on d based on d with d. Many
the the little deviations
courses of courses of deviation from the
actions action and from the courses of
and conclusion courses of action and
conclusion of the action and conclusion
(20%) of the study conclusion of the
study of the study
study
RUBRIC For Essay
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Traits 10 8 6 4
Focus & There is one There is one There is one he topic and
Details clear, well clear, well topic. main
focused focused Main ideas ideas are
topic. Main topic. Main
ideas are ideas are
are not clear
clear and clear but are somewhat
are well not well clear..
supported by supported by
detailed and detailed
accurate information.
information.
Organization The The The There is no

introduction introduction introduction clear
is inviting, states the states the introduction,
states the main topic and main topic. A structure,or
main topic, provides an conclusion is conclusion.
and provides overview of included
an overview the paper. A
of the paper. conclusion is
Information included
is
relevant and
presented in
a logical
order. The
conclusion is
strong.
Word Choice The author The author The author The writer
uses vivid uses vivid uses words uses a
words and words and that limited
phrases. The phrases. The communicate vocabulary.
choice and choice and clearly, but Jargon or
placement placement the writing clichés may
of words of words is lacks be present and
seems inaccurate variety.. detract
accurate, at times from the
natural, and and/or seems meaning
not forced. overdon
Sentence All sentences Most sentences Most sentences Sentences

Structure, are well are well are well sound
Grammar, constructed constructed constructed, awkward, are
Mechanics, & and have and have but they distractingly
Spelling varied varied have a similar repetitive,
structure and structure structure or are
length. There and length. and/or length. difficult to
are no errors There are few The author understand.
in errors in makes several The author
grammar, grammar, errors in makes numerous
mechanics, mechanics, grammar, errors in
and/or and/or mechanics, grammar,
spelling. spelling, but and/or mechanics,
they do not spelling that and/or
interfere interfere spelling
with with that interfere
understanding. understanding. with
understanding.
Comments
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Journal Article Critique
Journal Article Critique

Good Fair Poor
5 pts 3 pts 1 pts
Organization Good Fair Poor
Paper is well organized, Paper is organized, has an Paper is not well

has a very clear intro, intro, body and organized, has an unclear
body and conclusion. The conclusion. The purpose or non-existent intro,
purpose of the paper is of the paper becomes body and conclusion. The
clear from the very clear within the paper and purpose of the paper is
beginning and the name the name and author of unclear and the name and
and author of the article is the article is mentioned author of the article is not
made clear early in the within the paper. stated or stated late.
paper.
Summary Good Fair Poor
The article is clearly but The article is clearly The article summary is
succinctly summarized - summarized, but some unclear or overly
only the key points of the sub points are addressed detailed. Often well over
article are touched upon. along with main points. half of the assignment is
The article summary takes The summary is not taken up by the
up no more than one third succinct. Often the summary.
of the total assignment. summary takes up more
than 1/3 of the total
assignment.
Critique Good Fair Poor
Strengths and weaknesses Strengths and weaknesses Strengths and

that are central to the that are peripheral to the weaknesses are addressed
article are addressed. The article are addressed. The peripherally, weakly, or
discussion of strengths discussion of strengths not at all. The discussion
and weaknesses take up and weaknesses take up of strengths and
the majority of the the majority of the weaknesses take up only
assignment. assignment a small part of the
assignment
Mechanics Good Fair Poor
There are no grammatical There are few There are many

errors or typos. grammatical errors or grammatical errors
typos and/or typos
Meets Good Fair Poor

Requirements
APA/MLA and page APA/MLA and page APA/MLA and page
length requirements are length requirements are length requirements are
met met not met.
https://www.rcampus.com/rubricshowc.cfm?sp=yes&code=A22B44
104
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DAVAO CENTRAL COLLEGE, INC.

Juan dela Cruz Street, Toril, Davao City

Prepared by:Ramil Fernando s. Brucal,MBA, MM(c.a.r)

Course Name: Distribution Management

Week 1Requirements: Essay

Week 2 Requirements: Journal critique

Week 3Requirements: Case Study

Unit Requirements: Written Case Study

Week 5Requirements: Reflection paper

Week 6Requirements: Case Analysis

Week 7 Requirements: Essay

Week 8Requirements: Reflection paper

Week 9 Requirements: Journal Critique

Week 10Requirements: Essay

Week 11Requirements: Reflection paper

Week 12Requirements: Journal critique

Unit Requirements: Reflection paper and journal critique

Week 13 Requirements: Essay

Week 14Requirements: Reflection paper

Week 15Requirements: Journal critique

Week 16Requirements: Essay

Week 17Requirements: Distribution plan

Week 18 Requirements: Distribution plan presentation

Unit 1: Overview of Distribution Management and the

Topic: Definition of distribution management and

Concept Digest (Discussion)

One overriding implication to distribution management in

Definition of Distribution Management

utilizes: state of the art information systems,

Factors Influencing Distribution Management

Distributor perspective. The perfect circumstance for

Communication. Running out of a product or component

are provided. Distributors are provided real time sales

Planning and Measuring: Creating a Culture. The first

Training and Commitment. Training employees to execute

Implementing the Right Tools: Warehousing and

Successful Distribution Management

is the key to a successful distribution management.

BR Williams, (2020). “The Top 6 Factors That Influence

Ross, D. F. (2004). Components of Distribution Management.

Unit 1: Overview of Distribution Management and the

Topic: The Marketing Channel

Concept Digest (Discussion)

The Marketing Channel Defined

Marketing channel is defined as the external

 The term contractual organization refers to those

 The third term operates suggests involvement by

 Lastly, the fourth term is distribution objectives,

The Channel Manager. The term channel manager refers to

The Flows in Marketing Channel

restaurants and other retail outlets, where it is

 Negotiation flow. The negotiation flow represents

 Ownership flow. The ownership floe shows the

 Information flow. The information flow involves

 Promotion flow. The promotion flow refers to the

The Channel Structure

allocation decision which is a given set of

The Ancillary Structure

The Channel Participants

2. Intermediaries. Intermediaries or middlemen are

The Wholesale Intermediaries

industrial, commercial, institutional, professional,

 Manufacturer’s sales branches and offices are

The Retail Intermediaries