15

Designing and Managing

Integrated
Marketing Channels

Marketing Management, 13th ed

Chapter Questions
What is a marketing channel system and
value network?
What work do marketing channels perform?
How should channels be designed?
What decisions do companies face in
managing their channels?
How should companies integrate channels
and manage channel conflict?
What are the key issues with e-commerce?
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

15-2

Philips Emphasizes Value Delivery

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

15-3

What is a Marketing Channel?

A marketing channel system is the
particular set of interdependent
organizations involved in the process of
making a product or service available
for use or consumption.

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

15-4

Channels and
Marketing Decisions
A push strategy uses the manufacturers
sales force, trade promotion money, and
other means to induce intermediaries to
carry, promote, and sell the product to end
users.
A pull strategy uses advertising, promotion,
and other forms of communication to
persuade consumers to demand the product
from intermediaries.

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

15-5

Aldi Adjusted Its Strategy

for the U.S. Market

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

15-6

Buyer Expectations for

Channel Integration
Ability to order a product
online and pick it up at a
convenient retail location
Ability to return an onlineordered product to a
nearby store
Right to receive discounts
based on total online and
offline purchases

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

15-7

Categories of Buyers
Habitual shoppers
High value deal seekers
Variety-loving shoppers
High-involvement shoppers

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

15-8

Types of Shoppers
Service/quality customers
Price/value customers
Affinity customers

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

15-9

Channel Member Functions

Gather information
Develop and disseminate persuasive
communications
Reach agreements on price and terms
Acquire funds to finance inventories
Assume risks
Provide for storage
Provide for buyers payment of their bills
Oversee actual transfer of ownership
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

15-10

Figure 15.2 Marketing Channel Flows

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

15-11

Figure 15.3
Consumer Marketing Channels

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

15-12

Figure 15.3
Industrial Marketing Channels

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

15-13

Designing a
Marketing Channel System
Analyze customer needs
Establish channel objectives
Identify major channel alternatives
Evaluate major channel alternatives
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

15-14

Channel Service Outputs

Lot size
Waiting/delivery time
Spatial convenience
Product variety
Service backup
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

15-15

Identifying Channel Alternatives

Types of
intermediaries
Number of
intermediaries
Terms and
responsibilities
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

15-16

Number of Intermediaries
Exclusive
Selective
Intensive

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

15-17

Terms and Responsibilities

of Channel Members

Price policy
Condition of sale
Distributors territorial rights
Mutual services and responsibilities

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

15-18

Figure 15.4 The Value-Adds vs. Costs

of Different Channels

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

15-19

Figure 15.5 Break-Even Chart for the

Choice Between a Company Sales Force
and Manufacturers Sales Agency

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

15-20

Channel-Management Decisions
Selecting channel members
Training channel members
Motivating channel members
Evaluating channel members
Modifying channel members
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

15-21

Channel Power

Coercive
Reward
Legitimate
Expert
Referent

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

15-22

Channel Integration and Systems

Vertical marketing
systems
Corporate VMS
Administered VMS
Contractual VMS
Horizontal
marketing systems
Multichannel
systems
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

15-23

What is Channel Conflict?

Channel conflict occurs when one
members actions prevent another
channel from achieving its goal.
Types of channel conflict
Vertical
Horizontal
Multichannel

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

15-24

Causes of Channel Conflict

Goal incompatibility
Unclear roles and rights
Differences in perception
Intermediaries dependence
on the manufacturer
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

15-25

Table 15.3 Strategies for Managing

Channel Conflict
Adoption of
superordinate goals
Exchange of
employees
Joint membership in
trade associations

Cooptation
Diplomacy
Mediation
Arbitration
Legal recourse

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

15-26

Coach Avoids Brand Dilution

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

15-27

e-Commerce Marketing Practices

Pure-click
Brick-and-click

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

15-28

Marketing Debate
Does it matter where you are sold?
Take a position:
1. Channel images do not really affect
the brand images of the products they
they sell that much.
or
2. Channel images must be consistent with
the brand image.
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

15-29

Marketing Discussion
Think of your favorite retailers.
How have they integrated their
channel system?
How would you like their channels to
be integrated?
Do you use multiple channels from
them? Why?
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

15-30