Chapter 5

Strategy in Marketing Channels

5-3
Objective 1: 5
Marketing Strategy

Marketing Strategy by Kotler:

The broad principles by which the firm

expects to achieve its marketing objectives
for its
target market(s)
Objective 1: 5
Marketing Channel Strategy

Channel Strategy:

The broad principles by which the firm

expects to achieve its distribution
objectives for its
target market(s)
Objective 2:
5
Channel Decisions to achieve
Distribution Objectives
1. The role of distribution in the firm’s overall objectives &
strategies
2. The role distribution should play in the marketing mix
3. The design of the firm’s marketing channels
4. The selection of channel members
5. The management of the marketing channel in order to
implement the firm’s channel design effectively &
efficiently on a continuing basis
6. The evaluation of channel member performance
Objective 3:
5
Channel Strategy as Overall
Corporate Objective

The higher the priority given to

distribution, the higher the level
at which it should be considered
in formulating the organization’s
overall objectives and strategies
 5
The Value Chain

Firm infrastructure

Ma
Support Human resource management

rgi
Activities

n
Technology development

Procurement

Inbound Operations Outbound Marketing Service g in

r
logistics logistics & sales Ma

Primary Activities
 Determining the Priority Given 5
to Distribution

Distribution does increasingly warrant

the attention of top management,
because competition has made the
issue of distribution too important for
top management to ignore.

• Coca-Cola “Sakaya”/ 酒屋 /Liquor store (leave no stone unturned)

• Procter & Gamble plus Wal Mart
US$ 500+ Billion Annual Revenue in 2019
 Over-the-top (OTT) Media Service
Subscription-Based Video-on-Demand (SVoD)
Ex: Netflix
An over-the-top (OTT) media service is a streaming media service offered directly to viewers via the Internet. OTT bypasses cable,
broadcast, and satellite television platforms, the companies that traditionally act as a controller or distributor of such content.[1] It
has also been used to describe no-carrier cellphones, where all communications are charged as data,[2] avoiding monopolistic
competition, or apps for phones that transmit data in this manner, including both those that replace other call methods[3][4] and
those that update software.[4][5]

The term is most synonymous with subscription-based video-on-demand (SVoD) services that offer access to film and television
content (including existing series acquired from other producers, as well as original content produced specifically for the service).

OTT also encompasses a wave of "skinny" television services that offer access to live streams of linear specialty channels, similar to
a traditional satellite or cable TV provider, but streamed over the public Internet, rather than a closed, private network with
proprietary equipment such as set-top boxes.

Over-the-top services are typically accessed via websites on personal computers, as well as via apps on mobile devices (such as
smartphones and tablets), digital media players (including video game consoles), or televisions with integrated Smart TV platforms.
The Strategic Planning,
Implementation,
and Control Processes

17/32
Objective 4: 5

Channel Strategy & the Marketing Mix

The essence of modern marketing

management:

To develop a marketing
mix of product, price,
promotion, & distribution
(place)
 Target Market Satisfaction

Ts=ʄ(P P P P )
1, 2, 3, 4,
Objective 5: 5
Emphasis on Distribution Strategy

IF • Distribution is the most relevant variable for satisfying

: target market demands.
or • Parity exists among competitors in the other three
variables of the marketing mix.
or • A high degree of vulnerability exists because of
competitors’ neglect of distribution.
or • Distribution can enhance the firm by creating synergy
from marketing channels.

THEN: The firm should choose distribution

strategy for strategic emphasis
 5
Target Market Demand

Firms should stress distribution when it serves

customers’ needs in the target market.

Marketing channels are so closely linked to customer

need satisfaction because it is through distribution
that firms can provide the kinds and levels of service
that make satisfied customers.
 5
Competitive Parity

Distribution advantages are not easily copied by

competitors.

Distribution advantages are based on a combination

of superior strategy, organization, and human
capabilities.
 5
Distribution Neglect

Competitors’ neglect of distribution strategies

provides excellent opportunities.

The channel manager must analyze target markets to

determine whether competitors have neglected
distribution and whether vulnerabilities exist that can
be exploited.
 5
Distribution and Synergy

“Hooking up” with a mix of cooperative

channel members will strengthen the channel.

Because each channel member is an independent

entity, rewarding opportunities exist for channel
managers to cultivate cooperation among members.
Objective 6: Differential Advantage 5
& Channel Design

Differential advantage, also called sustainable

competitive advantage, occurs when a firm
attains a long-term, advantageous position
in the market relative to competitors.

• Caterpillar
 5
Positioning the Channel

A firm that plans the channel and makes

decisions by viewing the relationship
with channel members as a partnership
or strategic alliance that offers
recognizable benefits to the
manufacturer & channel members on a
long-term basis

• Infiniti
 Price Assurance Plan
infiniti will now guarantee that :
If Nissan modifies its vehicle pricing within 30 days of
purchase, the difference will automatically be refunded.
Customers can be confident that they don’t have to monitor
the marketplace to obtain best possible price.
Objective 7: 5
Selection of Channel Members

Because customers perceive channel

members as an extension of the manufacturer’s own
organization, members should:

• Reflect channel strategies the firm has developed to achieve

its distribution objectives
• Be consistent with the firm’s broader marketing objectives
& strategies
• Reflect the objectives & strategies of the organization as a
whole
 Objective 8: 5
Channel Strategy & Managing the
Channel

1) How close a relationship 3) How should the

should be developed marketing mix be used to
with the channel enhance channel
members? member cooperation?
3
Strategic
Questions

2) How should the channel

members be motivated to cooperate
in achieving the manufacturer’s
distribution objectives?
 5
1) Closeness of Channel Relationships

Factors to consider

• Distribution intensity
• Targeted markets
• Products
• Company policies
• Middlemen
• Environment
• Behavioral dimensions
Continuum portraying Degree of Closeness of Manufacturer with
Channel members
Continuum of Intensity of Distribution
Objective 9: 5
Motivation of Channel Members

Distribution Portfolio Concept (DPA):

A tool for motivating different types

and sizes of channel members participating
in various channel structures who may respond
differently to various motivation strategies.
Matrix of Vertical & Horizontal portfolios of Channel Structures
& Members
 Marketing Mix in 5

Channel Management

Product Relationships/
strategy Interfaces

Distribution Pricing
Marketing
strategy strategy
Mix

Promotion
strategy
Objective 10: 5
Channel Strategy &
Evaluation of Channel Member
Performance

Channel manager’s involvement

in evaluating member performance is integral to
developing & managing channel

Have provisions been made in the design and

management of the channel to assure that
channel member performance will be
evaluated effectively?