Bachelor of Business Management Degree

Department of Management
Faculty of Management

1
SAEGIS CAMPUS
Designing and Managing Integrated
Marketing Channels

2
https://www.youtube.com/watch?v=EvKEzXkOYjs
 Marketing Channels

Marketing Channel

Marketing channel is a set of independent organizations

that help make a product or service available for use
or consumption by the consumer or business users.

4
 Importance of Marketing Channels

Number of Channel Members

Channel level refers to each layer of marketing intermediaries

that performs some work in bringing the product and its
ownership closer to the final buyer

Direct marketing channel has no intermediary levels; the

company sells directly to consumers

Indirect marketing channels contain one or more

intermediaries
5
 Forms of Distribution Channels

Given the 3 channels above, which is “best”?

 Channel Behavior and Organization

Conventional Marketing Channel Systems

Conventional distribution systems consist of one or

more independent producers, wholesalers, and
retailers.

Each seeks to maximize its own profits and there is

little control over the other members and no formal
means for assigning roles and resolving conflict.
7
Modern Marketing Channel Systems
 Marketing Channel Systems

Vertical Marketing Systems

Vertical marketing systems (VMS) provide channel

leadership and consist of producers, wholesalers, and
retailers acting as a unified system.

• Ex:
• Apple Company has place for the designing and also the
making of the products. These products that are made by the
company are sold in the retailer shops of the company itself.
• Franchising
10
 Marketing Channel Systems

Horizontal Marketing Systems

Horizontal marketing systems include two or more
companies at one level that join together to follow a new
marketing opportunity.

• Ex:
• Banks in supermarkets
• Coca cola and nestle formed a joint venture to
market ready to drink coffee and tea worldwide.

11
 Marketing Channel Systems

Multi channel Distribution

Company uses different channels to reach / same or different

market segments
• Starbucks uses a multichannel distribution system by
selling in their own-stores, grocery stores, and their own
online site.
 Changing Channel Organization

Disintermediation occurs when product or service

producers cut out intermediaries and go directly
to final buyers, or when radically new types of
channel intermediaries displace traditional ones

13
 Channel Design Decisions

1. Analyzing consumer needs

2. Setting channel objectives
3. Identifying major channel alternatives
4. Evaluation
 Channel Design Decisions
1. Analyzing consumer needs
-,
Waiting and delivery time -Customers increasingly prefer
faster and faster delivery channels.

Convenience- The degree to which the marketing channel

makes it easy for customers to purchase the product

The add-on services are the credit, delivery, installation,

repairs and others provided by the channel

Product variety-customers prefer a greater assortment

because more choices increase the chance of finding what
they need.
15
 Channel Design Decisions

2. Setting channel objectives

1. Perishable products require more direct marketing because of the

dangers associated with delays and repeated handling.

2. Products requiring installation and/or maintenance services are

usually sold and maintained by the company or exclusively
branches dealers.
 Channel Design Decisions

3. Identifying major channel alternatives,

 Types of intermediaries-Company sales force

Manufacturer’s agency,
 Number of Intermediaries
 Responsibilities of each channel member.

17
 Channel Design Decisions

3. Identifying major channel alternatives,

Identifying Major Alternatives

Number of marketing intermediaries to use at each level

• Market coverage Strategies:
• Intensive distribution
• Exclusive distribution
• Selective distribution 18
 Channel Design Decisions
3. Identifying major channel alternatives,
Identifying Major Alternatives

• Intensive distribution is a strategy used by producers of

convenience products and common raw materials in
which they stock their products in as many outlets as
possible.
• Ex: supermarkets, discount stores, convenience stores

• Usually for simple, inexpensive, easily transported

products, ex: Snack food, shampoo, newspapers, etc. 19
 Channel Design Decisions

3. Identifying major channel alternatives,

Identifying Major Alternatives

Exclusive distribution is an intense form of selective

distribution in which only one distributor is
appointed in each territory.
Ex: Luxury automobiles
• High-end apparel
20
 Channel Design Decisions
3. Identifying major channel alternatives,
Identifying Major Alternatives

Selective distribution is a strategy when a producer

using a limited number of outlets in a geographical
area to sell products.
Televisions
• Appliances
• NIKE
• Addidas 21