Identifying Major Channel Alternatives INTERMEDIARY

a person who acts as a link between

people in order to try to bring about
an agreement or reconciliation; a
mediator.

Types of Intermediaries Number of Intermediaries Terms & Responsibilities

Sales Force Exclusive Distribution Price Policies

CHANNEL
Internet ALTERNATIVES Condition of Scales
Selective Distribution
Distributors Territorial Rights

Manufacturer Intensive Distribution Mutual Services and

Representatives Responsibilities
Evaluating Major
Channel Alternatives

• Economic
Control
AdaptiveCriteria
Criteria
Channel
Each channel
evolution
alternative
involves
has some
towill
include
duration
produce
control
of
a different
commitment
issues. Using
leveland
ofa
salesofagency
loss andflexibility
cost.poses a control problem.
CHANNEL MANAGEMENT
DECISIONS
Selecting Channel
Members:
Should have these characteristics :
• Number of years in business
• Other lines carried
• Growth and profit record
• Cooperativeness
• Service reputation
Selection
Process:

Applying selection
criteria to Securing the
Finding determine the prospective
prospective suitability of channel members
channel members prospective as actual channel
channel members members
Training and Motivating
Channel Members

• Motivating
Training Channel
ChannelMembers
Members
The company
Channel members
should
canprovide
be motivated
training through
programs
training and
to improvecapacity
programs, intermediariesprograms,
performance.
promotional support, and
marketing research.
A manufacturer threatens to The manufacturer offers
withdraw a resource or intermediaries an extra The manufacturer requests a
terminate a relationship if benefit for performing behavior that is warranted
intermediaries fail to cooperate. specific acts or functions. under the contract

Coercive Power Reward Power Legitimate Power

Channel Power
Expert Power Referent Power

The manufacturer has special The manufacturer is so highly

knowledge the intermediaries respected that intermediaries are
value. Once the intermediaries proud to be associated with it
acquire this expertise,
however, expert power
weakens.
 Channel Partnership

More sophisticated
Manufacturers companies
and retailers tryadopted
have to forgeefficient
a long-term partnership
consumer with(ECR)
response distributors.
practices
to organize their relationships in three areas:

demand-side management supply-side management

enablers and integrators

ECR (Efficient Consumer Response)

is a strategy to increase the level of services to consumers through close
cooperation among retailers, wholesalers, and manufacturers.
 Evaluating Channel Members

Manufacturers regularly check performance against standards such as:

• sales quotas
• inventory levels
• customer delivery time
• treatment of damaged and lost goods
• cooperation in promotional and training programs.
 No channel strategy remains effective over the whole product
life cycle. In competitive markets with low entry barriers, the
optimal channel structure will inevitably change over time.

Modifying Channel Design and

Arrangement
Channel Evolution

A new firm typically starts as a local operation selling in a fairly

circumscribed market, using a few existing intermediaries.
Identifying the best channels might not be a problem; the problem is
often to convince the available intermediaries to handle the firm’s
line.
Channel Modification Decisions:

A producer must periodically review and modify its channel design and
arrangements. The distribution channel may not work as planned, consumer
buying patterns change, the market expands, new competition arises, innovative
distribution channels emerge, and the product moves into later stages in the
product life cycle.
 International markets pose distinct challenges, including
variations in customers’ shopping habits and the need to gain
social acceptance or legitimacy among others, but opportunities
do exist.

Global Channel Considerations

Channel Integration And Systems
Channel Integration And Systems
Distribution channels don’t stand still.
We’ll look at the recent growth of vertical,
horizontal, and multichannel marketing
systems. After considering some e-
commerce and m-commerce issues, we
next examine how these systems
cooperate, conflict, and compete
 Vertical Marketing System Three types of VMS:
• Corporate VMS
Contractual VMS

Independent firms
Combines successive
at different
stages
levels of
A vertical marketing system (VMS), by contrast,
production & & distribution
distributionunder
integrating
single
includes the producer, wholesaler(s), and
ownership.
their programs on a contractual basis to
retailer(s) acting as a unified system. One
obtain more economies &/or sales
channel member, the channel captain, sometimes
called a channel steward, owns or franchises the impact than they could achieve alone. 
others or has so much power that they all • Administered VMS
cooperate.
• Wholesaler-sponsored
Coordinates voluntary
successive
chains stages of
production & distribution through the
• Retailer cooperatives
size & power of one of members 
• Franchise organizations
Horizontal Marketing
Systems
horizontal marketing system, in which two or
more unrelated companies put together
resources or programs to exploit an emerging
marketing opportunity.
CLASS SCHEDULE: Monday-Thursday
TIME SUBJECT CODE SUBJECT
03:00-04:30 P GE-ELEC14 Technical Communication

CBET 18-608E
06:00-07:30 P BA-MGT106 Risk Management
07:30-09:00 P BA-MGT105 Strategic Management

Tuesday-Friday
TIME SUBJECT CODE SUBJECT
03:00-04:30 P OM-ELEC102 Managerial Accounting
06:00-07:30 P OM-ELEC103 Personal Finance
07:30-09:00 P OM-109 Operations Research

Saturday
TIME SUBJECT CODE SUBJECT
10:30-01:30 P OM-110 Operations Strategy
 SUBJECT PROFESSORS NAME

CBET 18-608E
Technical Communication  Prof. Ricky G. Basilio

Operations Strategy Prof. Krisia Tekistekis Oledan

Operations Research  Dr. Lovelle D. Sison/ Dr. Lovelya Antoyo

Risk Management  Prof. Jenn M. Marcelino

Managerial Accounting  Dr. Carmel T. Mosura

Personal Finance  Dr. Madonna M. Siniguian

Strategic Management  Prof. Marianne C. Estrada