Electronic Marketing Channels

Marketing Channels
Part 4: Additional Perspectives on Marketing

Channels
A Management View
8e
Rosenbloom
Part 4: Additional
CHAPTER Perspectives on Marketing Channels 15
15
CHAPTER
Electronic Marketing
Channels
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
① Electronic marketing channels
Learning Objectives
② Structure of electronic channels
③ Disintermediation and reintermediation
④ Internet limits
⑤ Developments and trends
⑥ Advantages and disadvantages
⑦ Implications
©2013
©2013Cengage
CengageLearning. All Rights
Learning. All Reserved.May
Rights Reserved. Maynot
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copied or duplicated,
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or posted to a publicly
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accessible website,website,
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in part.or in part.
Objective
1 Channels
Technology Devices with

Internet Access
Increased Impact on
Design & Management of Marketing Channels
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Channels
Not physical availability
The use of the Internet to make products & services

available so that the target market with access to
computers or other enabling technologies can shop
& complete the transaction for purchase via
interactive electronic means
Actually browse and purchasing products through the use

of PCs, Web-TV, PDAs, smartphones, e-readers, tablets, etc.
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Objective
Structure of Electronic
2 Marketing Channels
1. Disintermediation versus
reintermediation
Three 2. Information flow versus
Key product flow
Phenomena
3. Virtual channel structure
versus
physical channel structure
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Objective
Disintermediation and
3 Reintermediation
Disintermediation
Intermediaries become
superfluous because
producers gain exposure
to vast numbers of
customers in cyberspace
Examples: None
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Objective
Disintermediation and
3 Reintermediation
Reintermediation
Shifting, changing, or
adding middlemen to the
channel
Examples: Amazon.com
Autobytel Inc.
Peapod
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Disintermediation versus
Reintermediation
No matter how Efficiency in the
technologically performance of
sophisticated the distribution tasks is
Internet becomes or what ultimately
how much it is hyped, determines what form
the laws of economics channel structure will
as they relate to take.
channel structure do
not change.
The Internet has not eliminated middlemen,

or caused total disintermediation.
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Objective
Internet Limits
4
Product Flow
• Cannot be digitized
• Processed slowly, often by people
• Is basis for all other flows—negotiation,

ownership, information, & promotion
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Objective
Developments & Trends
5
• Online shopping rose from $25 billion

in 2000 to more than $175 billion in
2010
Electronic • Online shopping has become a routine

Marketing shopping choice
Channels
• PCs, peripherals, software, & books
accounted for a significant
portion of total retail spending on
these products
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Profile of Online Shoppers
• Age range of 18 to 32
Highest
Percentages
• Income level range
$50,000 to
about $100,000
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Future of Online Shopping
Online Sales as a Percentage of Total Retail Sales
Year Online as % of % Change from
Retail Sales Previous Year
2002 1.3 19.7
2010 8.0 0.0
2011 9.0 12.5
2012 10.0 11.1
2013 10.0 0.0
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Electronic Channels on Social
Network Sites
• By 2009, almost ½ of Americans had a

Facebook or MySpace account
• Among American, age 18-33, almost ¾
were registered with Facebook or MySpace
• Businesses are now rapidly engaging in F-
commerce (Facebook Commerce)
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Objective
Advantages & Disadvantages
6
Advantages of
Electronic
Marketing Channels
1. Global scope & reach

2. Convenience/rapid transaction processing
3. Information processing efficiency & flexibility
4. Data-based management & relationship capabilities
5. Lower sales & distribution costs
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Advantages & Disadvantages
Disadvantages of
Electronic
Marketing Channels
1. Lack of contact with actual products & delayed

possession
2. Fulfillment logistics not at Internet speed or efficiency
3. Clutter, confusion, & cumbersomeness of Internet
4. Non-purchase motives for shopping not addressed
5. Security concerns of customers
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Objective
Implications
7
• Objectives & strategies of the firm & electronic
marketing channels
• Role of electronic marketing channels in the
marketing mix
• Channel design & electronic marketing channels
• Channel member selection & electronic marketing
channels
• Channel management & electronic marketing
channels
• Evaluation & electronic marketing channels
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Objectives & Strategies of the Firm
Role of distribution more complex because

of electronic marketing channels
=
Channel manager must consider whether
Internet-based channels fundamentally affect
the firm’s decision about the priority
given to distribution
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The Marketing Mix
The Internet arms large numbers of customers with

more information about products & services
to level the playing field
The fourth P, place (distribution), may assume a

larger role relative to the other three variables for
more & more firms
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Channel Design
The channel manager of retailers, industrial, and

B2B markets should provide “channel-surfing”
consumers with whatever channels or
combinations of channels they desire
=
A facet of the development of an
effective multichannel marketing strategy
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Channel Member Selection
Complexity grows as channel member selection

may include the need to avoid conflict with
conventional channel members
=
The need to select members carefully
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Channel Management
Multichannel challenge of conventional and

electronic channels
=
The fundamental issues of motivating channel
members, building cooperation, managing
conflict, & coordinating elements of the
marketing mix requires manager’s full attention
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Evaluation
Unlikely to change Likely to change
Performance expectations, Specific criteria for

criteria, & measurement of performing
how well they are being met evaluations &
by channel members technological means for

doing so
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Discussion Question #1
The Internet electronically links many thousands of
manufacturers to millions of consumers, thereby
eliminating the need for middlemen in the twenty-first
century. Who needs intermediaries if customers can go
online and manufacturers all have Web site that can be
visited by customers from literally all corners of the
earth? Shopping trips, malls, stores, indeed, the bricks
and mortar of current channel structure will eventually
become obsolete—a relic of earlier centuries.
Do you agree or disagree with this scenario? Discuss.
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Office Depot has almost 1,000 office superstores and a
giant catalog of office supplies that it offers via mail order.
Yet Office Depot also enables its customers to shop on the
Internet. Its Web site offers virtually all of the products
Office Depot carries in its stores and catalog and
guarantees next-day delivery to most locations in the
United States with no delivery charge on orders over $50.
Online order tracking is available, and customized ordering,
which takes into account the historical patterns of an
individual customer’s product purchases, is also a feature of
Office Depot’s Internet-based channel.
What do you see as the advantages of Office Depot’s

multichannel strategy? Are there any disadvantages?
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One of the potentially powerful advantages of m-commerce
is the ability of sellers to target offers to consumers when they
are in close proximity to the seller. This is made possible based
on smartphone technology that tracks the exact geographical
locations of their users. For example, if a consumer is near a
Staples Office Superstore, a text message can be automatically
sent to the consumer’s smartphone about a special offer on, say,
print cartridges and paper. The technology that has made such
m-commerce based proximity marketing possible was
developed by startups such as ShopKick, Where, and Loopt, as
well as by giants such as AT&T’s ShopAlerts. Although available
to anyone with a smartphone, the proximity alerts will only be
sent to consumers who have signed up for the program.
Do you think this type of m-commerce is an important

channel option for consumers and sellers? Why or why not?
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Marketing Channels

Part 4: Additional Perspectives on Marketing

② Structure of electronic channels

③ Disintermediation and reintermediation

⑤ Developments and trends

⑥ Advantages and disadvantages

Technology Devices with

Design & Management of Marketing Channels

The use of the Internet to make products & services

Actually browse and purchasing products through the use

The Internet has not eliminated middlemen,

• Processed slowly, often by people

• Is basis for all other flows—negotiation,

• Online shopping rose from $25 billion

Electronic • Online shopping has become a routine

2010 8.0 0.0

2011 9.0 12.5

2012 10.0 11.1

2013 10.0 0.0

• By 2009, almost ½ of Americans had a

1. Global scope & reach

1. Lack of contact with actual products & delayed

Role of distribution more complex because

The Internet arms large numbers of customers with

The fourth P, place (distribution), may assume a

The channel manager of retailers, industrial, and

Complexity grows as channel member selection

Multichannel challenge of conventional and

Unlikely to change Likely to change

Performance expectations, Specific criteria for

how well they are being met evaluations &

by channel members technological means for

Do you agree or disagree with this scenario? Discuss.

What do you see as the advantages of Office Depot’s

Do you think this type of m-commerce is an important

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