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Viraj Mahida QA Roll no:18 Smit Bhavsar QA Roll no:16
marketing channel is a system of relationships existing among businesses that participate in the process of buying and selling products and services.”
• Four Ps
• Four Cs
P = Location • Convenience • Distribution • Availability • Accessibility • Usability • Where and when necessary • Size and portability .
and several other considerations. • With the rise of internet and hybrid models of purchasing. find information about a product. place is no longer as relevant as before.Place.Convenience • Placement is replaced by the convenience function. find a product. • Convenience takes into account the ease to buy a product. .
superstores etc.Place • Convenience Products . malls.have to be in convenient places .Product Classes .ie. • Specialty Products .have to available where people want to buy them .have to be where shoppers go. and where you can park easily . vending machines • Shopping Products .small stores. Movie theatres have to be located where many people go.
you may have to change locations to make it better for customers who are no longer so strongly interested in buying .Place and PLC • PLACE must be considered in terms of the Product Life Cycle • In the beginning Growth Stage . but in the maturity or decline stage.it might be good to have your product sold in a certain location.
Functions of distribution channel • Link between production and consumption • Market information • Communicate promotional offers • Transporting & storing • Financing and Risk taking .
Types of Channels • Consumer Product Channels zero-level channel One-level channel Two-level channel Three-level channel strategic channel alliance .
Marketing Channels for Consumer Products Manufacturer Manufacturer Manufacturer Manufacturer Agents Wholesalers Wholesalers Retailers Retailers Retailers Consumers A Consumers B Consumers C Consumers D .
Tupperware. Bharat Petroleum .Direct channels •Door to door sales •Mail order •Telemarketing •Tv selling Manufacturer owned stores: Example-Eureka Forbes.
Industrial Product Channels Manufacturer Manufacturer Manufacturer Manufacturer Agent Agent Industrial Distributors Industrial Distributors Industrial Buyers P Industrial Buyers Q Industrial Buyers R Industrial Buyers S .
Intensity of Market Coverage • A company must determine the distribution coverage intensity a product should get. • Exclusive Distribution: This type of distribution means using one or very limited few outlets. . • Intensive Distribution: A company uses all available distribution outlets for making its product available to consumers. Three major coverage strategies include intensive. and exclusive distribution. selective. which means using more than a few and less than all available outlets in a market area to distribute products. what number and kinds of channel in which the product will be sold. • Selective Distribution: Companies use selective distribution.
000 retail outlets. Gillette.Sherwin.Vertical Marketing System (VMS) • Vertical marketing system refers to an arrangement in which the whole channel focuses on the same target market at the end of the channel. administered – Kodak.value-adding partnerships .Williams makes paint but also owns and operates 2. Procter & Gamble contractual. • There are three types of VMS – corporate .
Horizontal Marketing Systems • Horizontal marketing system occurs when two or more related or unrelated companies working at the same level come together to exploit marketing opportunities. .
Channel length : Direct/Indirect • Choice of intermediary • Logistics options for channels • Control over the channel • Who decides price. packaging . promotion.
Why use intermediaries? • Geography – Customers may live far away to be reached directly • Segmentation – Different segments can be reached only by different distribution channels • Lack of retailing experience • Better use of resources elsewhere .
Factors to be considered in selection of channels • Type of product?: • Is it sold to other producers or customers? • How often the product is purchased? • How expensive is the product? • How perishable is the product? • Location of customers? • Competitors .
Marketing Channel Management Formulating channel strategy Design channel structure Select channel members Motivate channel members Coordinate with marketing mix Evaluate member performance • Realize only the place „P‟ provides protection from imitation • Distribution strategies can provide sustainable competitive advantage .
Marketing Channel Management Formulating channel strategy Design channel structure Select channel members Motivate channel members Coordinate with marketing mix Evaluate member performance Set distribution objectives Specify tasks to be performed by the channel Consider alternative structures Choose optimal structure .
Marketing Channel Management Formulating channel strategy Design channel structure Select channel members Motivate channel members Coordinate with marketing mix Evaluate member performance • Optimal structure identified by considering: • • • • • • Market variables Product variables Company variables Intermediary variables Behavioral variables External environment variables .
Marketing Channel Management Formulating channel strategy Design channel structure Select channel members Motivate channel members Coordinate with marketing mix Evaluate member performance • Find prospective channel members • Evaluate prospective channel members • Convert prospective into actual channel members .
Marketing Channel Management Formulating channel strategy Develop selection criteria Credit and Financial Condition Sales Strength Design channel structure Attitude Size Select channel members Motivate channel members Coordinate with marketing mix Evaluate member performance Management Ability Prospective channel member Product Lines Management succession Sales Performance Market Coverage Reputation .
Marketing Channel Management Formulating channel strategy • Learn about the needs and problems of channel members • Advisory committees Design channel structure Select channel members • Offer support • Informal support • Strategic alliances. partnerships • Provide ongoing leadership • Continuing focus Motivate channel members Coordinate with marketing mix Evaluate member performance .
Marketing Channel Management Formulating channel strategy Design channel structure Select channel members Motivate channel members • Product and Channel • Retailers (a channel member) play an important role in product positioning • Personal selling • Pricing and Channel • Relevant to channel members: • Profit margins available to channel members • Pricing policies • Incentives Coordinate with marketing mix Evaluate member performance • Promotion and Channel • Promotions interface with channel members • Point-of-purchase displays • Inventory levels • Sales person training .
Marketing Channel Management Formulating channel strategy Design channel structure Select channel members Motivate channel members Coordinate with marketing mix • Assessment of success of channel members in implementing strategies • Requires good information flows between members • Point-of-sale systems Evaluate member performance .
and sales representatives • Situation in which one channel member perceives another channel member(s) to be engaged in behavior that prevents it from achieving its goals. to a large extent. • The amount of conflict is. such as distributors. dealers. retailers. and • differing perceptions of reality . • domain descensus.Channel Conflicts and Cooperation • Channel conflict occurs when manufacturers disintermediate their channel partners. a function of • goal incompatibility.
two organizations can perceive that they are in disagreement but their individual members do not consider it as a very serious issue. . • Felt conflicts – When channel members not only perceive the opposition or disagreement but also feel it actually they are felt or affective conflicts.e. This is due to the separate or un-conflicting goals. It is more psychological.Types of conflict • Latent conflict – The channel members may be unaware about the opposition. They do not fully sense the conflict. i. This needs to be sorted out at a early stage to avoid further consequences. • Perceived conflict – The channel members sense that some sort of opposition of perceptions. or of intensions exists. of interest.
they can become manifest or overt conflicts and these conflicts stop the cooperation and understanding between two organizations and block the other from achieving its goals. this opposition will improve their relationship. • Functional Conflict – When channel members accept that there is opposition and disagreement but actually. . obvious and sometimes desirable too due to the interdependence of channel members on each other.Types of conflict • Manifest Conflict – If felt conflicts are not managed in time and properly. It is common. it becomes functional conflict.
Types of Conflict In any distribution channel arrangement there can possibly develop three kinds of conflicts: Vertical channel conflict Horizontal channel conflict Multichannel conflict .
Vertical Channel Conflict .
. i. • New channels.e.e. reduce sales opportunities for individual dealer and ultimately shrink their profits. manufacturers develop and use innovative channels that create threat to establish channel participants. manufacturers permit too many intermediaries in a designated area that can restrict.Reasons for vertical conflict • Dual distribution i.e. • Partial treatment. i. manufacturers offer different services and margins to the different channels members even at same level or favor some members. i. • Over saturation. manufacturers may bypass intermediaries and sell directly to consumers and thus they compete with the intermediaries.e.
Horizontal Channel Conflict:- .
Reasons for horizontal conflict • Price-off by one dealer / retailer can attract more customers of other retailers. • Aggressive advertising and pricing by one dealer can affect business of other dealers. . • Extra service offered by one dealer / retailer can attract customers of others. • Unethical practices or malpractices of one dealer or retailer can affect other and spoil the brand image. • Crossing the assigned territory and selling in other dealers / retailers / franchises area.
Multi channel conflict .
• whether it is survival. “ability of one channel member to influence another member‟s marketing decisions and goal achievement” • Adoption of Super ordinate goals – • An agreement on the fundamental goal they are jointly seeking.Some techniques are as follows • Channel leadership – • He possesses the channel power. high quality or customer satisfaction. • Exchange of persons between two or more channel levels • Joint membership in and between trade associations • Diplomacy – Diplomacy takes pace when each side sends a person or a group to meet with their counterpart from the other side to resolve the conflict . market share.
References • Designing and managing integrated marketing channels. Phillip Kotler. Dr D I Gupta . html • Marketing channels and physical distribution.consumerpsychologist.com/dist_Distribution_Objectives. 13th edition • Wikipedia • http://www.
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