14 Designing and Managing Integrated Marketing Channels

14
Designing and Managing

Integrated Marketing Channe
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 and m-
commerce?
Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from 14-2
the United States edition of Marketing Management, 14e.
Topics
Q1. What is a marketing channel? Who are
intermediaries? What is the difference between
merchants, agents and facilitators?
Q2. When we talk of Channels and Marketing
decisions, what do we mean by a push strategy
and a pull strategy?
Q3. What do we mean by hybrid channels? How
would we apply this concept to online shopping.
Q4. What do we mean by forward flow and
backward flow in channel member functions?
Q5. Use Fig. 14.2 to explain one-level, two-level
and three-level
Copyright channels
© 2013 Dorling Kindersley in consumer
(India) Pvt Ltd. Authorized adaptation from markets14-3
Topics
Q6. What are reverse-flow channels? Why are these channels
important? (to reuse, to refurbish, to recycle, to dispose off)
Q7. When we talk of service outputs of channels, what do we mean

by lot size; waiting and delivery time, spatial convenience, product
variety and service backup?
Q8. When we talk of the number of intermediaries involved in a

marketing channel, what do we mean by exclusive distribution,
selective distribution and intensive distribution?
Q9. What do we mean by price policy, conditions of sale,

distributors’ territorial rights and mutual services and
responsibilities under terms and responsibilities of channel
members?
Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from
14-4
Topics
Q 10. Discuss Break-Even Costs in determining
choice of channel.
Q11. What do we mean by coercive power,

reward power, legitimate power and expert
power under channel power. What is a Vertical
Market System?
Q12. What are the benefits companies receive

through adding more channels?
Topics
Q13. What do we understand by channel conflict?

Explain the following terms: Horizontal channel
conflict; Vertical channel conflict; multichannel
conflict? What is channel coordination?
Q 14. What are possible causes of channel conflict?
Q15. What could be possible strategies for managing
channel conflict?
Group-discussion
Q1. Some marketers feel that the image of the particular channel
in which they sell their product does not matter - all that matters is
that the right customers shop there and the product is displayed in
the right way. Others maintain that channel images such as a
retail store can be critical and must be consistent with the image
of the product. Use examples to take a position - Channel
images do not really affect the brand image of the product
they sell versus channel images must be consistent with the
Brand Image.
Q2. Think of your favorite retailers. Pick one or two
(examples) to answer these questions: How have they
integrated their channel system? What problems/issues do
you see? How would you suggest they integrate their
channels ? Do you use multiple channels from them? Why?
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.
Intermediaries
Channels and
Marketing Decisions
 Push strategy
 Pull strategy
Hybrid channels
Hybrid channels or multichannel marketing
occurs when a single firm uses two or more
marketing channels to reach customer
segments.
Buyer Expectations for
Channel Integration
 Ability to order a product online and pick it up
at a convenient retail location
 Ability to return an online-ordered product to a
nearby store
 Right to receive discounts based on total
online and offline purchases
Table 14.1 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
Figure 14.1 Marketing Flows
in the Marketing Channel
for Forklift Trucks
Marketing Channel Levels
 Zero-level channel (direct marketing channel)

 One-level channel
 Two-level channel
 Three-level channel
Figure 14.2 Consumer Markets
Figure 14.2 Industrial Markets
Reverse-Flow Channels
Reverse-flow channels are important to:
(1) reuse products or containers (such as refillable
chemical-carrying drums);
(2) refurbish products for resale (such as circuit
boards or computers)
(3) recycle products (such as paper)
(4) dispose of products and packaging
Copyright © 2012States
the United Pearson Education,
edition Inc. Publishing
of Marketing Management,as Prentice
14e. Hall
Designing a
Marketing Channel System
 Analyze customer needs
 Establish channel objectives
 Identify major channel alternatives
 Evaluate major channel alternatives
Service Outputs of Channels
Lot size
Waiting and delivery time
Spatial convenience
Product variety
Service backup
Identifying Channel Alternatives
 Types of intermediaries
 Number of intermediaries
 Terms and responsibilities
Number of Intermediaries
 Exclusive
 Selective
 Intensive
Terms and Responsibilities
of Channel Members
 Price policy
 Condition of sale
 Distributors’ territorial rights
 Mutual services and responsibilities
Figure 14.3 The Value-Adds
versus
Costs of Different Channels
Source: Oxford Associates, adapted from Dr. Rowland T. Moriarty. Cubex Corp.
Figure 14.4
Break-Even Cost Chart
Channel-Management Decisions
 Selecting channel members

 Training channel members
 Motivating channel members
 Evaluating channel members
 Modifying channel members
Channel Power
Coercive
Reward
Legitimate
Expert
Referent
Channel Integration and Systems
 Vertical marketing  Horizontal
systems marketing systems
 Corporate VMS  Multichannel
 Administered VMS systems
 Contractual VMS
Integrated Marketing Channel
System
An integrated marketing channel system is

one in which the strategies and tactics of
selling through one channel reflect the
strategies and tactics of selling through one or
more other channels.
Figure 14.5 The Hybrid Grid
Channel Conflict
 What types of conflict arise in channels?
 What causes conflict?
 What can marketers do to resolve it?
Causes of Channel Conflict
 Goal incompatibility
 Unclear roles and rights
 Differences in perception
 Intermediaries’ dependence on manufacturer
Table 14.2 Strategies for
Managing Channel Conflict
 Strategic  Cooptation
justification  Diplomacy
 Dual compensation  Mediation
 Superordinate goals  Arbitration
 Employee exchange  Legal recourse
 Joint memberships
E-Commerce
Pure-click
Brick-and-click
M-Commerce
For Review
 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 and
m-commerce?

14 Designing and Managing Integrated Marketing Channels

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14

Designing and Managing

Q7. When we talk of service outputs of channels, what do we mean

Q8. When we talk of the number of intermediaries involved in a

Q9. What do we mean by price policy, conditions of sale,

Q11. What do we mean by coercive power,

Q12. What are the benefits companies receive

Q13. What do we understand by channel conflict?

A marketing channel system is the

 Zero-level channel (direct marketing channel)

(4) dispose of products and packaging

Waiting and delivery time

 Selecting channel members

An integrated marketing channel system is

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