Marketing 624
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Marketing 624. Channels of Distribution Management. Marketing Channel Strategy. Dr. Bert Rosenbloom Professor of Marketing and Rauth Chair in Electronic Marketing. Channel Strategy. The broad principles by which the firm expects to achieve its distribution objectives for its target market(s).

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Marketing channel strategy

Marketing 624

Channels of Distribution Management

Marketing Channel Strategy

Dr. Bert Rosenbloom Professor of Marketing and

Rauth Chair in Electronic Marketing


Channel strategy

Channel Strategy

The broad principles by which the firm expects to achieve its distribution objectives for its target market(s)


Marketing channel strategy

Six Fundamental Strategic Distribution Decisions

  • What role should distribution play in the firm’s overall objectives and strategies?

  • What role should distribution play in the marketing mix?

  • How should the firm’s marketing channels be designed to achieve its distribution objectives?


Marketing channel strategy

Six Fundamental Strategic Distribution Decisions (Cont’d)

What kinds of channel members should be selected to meet the firm’s distribution objectives?

How can the marketing channel be managed to implement the firm’s channel design effectively and efficiently?

How can channel member performance be evaluated?


Channel design

Channel Design

Those decisions involving the development of new marketing channels where none had existed before, or the modification of existing channels


The design of the channel should contribute to the firm s quest for differential advantage

The design of the channel should contribute to the firm’s quest for Differential Advantage

Channel Design and Differential Advantage


Marketing channel strategy

Paradigm of the Channel Design Decision

  • Recognize need for channel design decision

  • Set and coordinate distribution objectives

  • Specify distribution tasks

  • Develop possible alternative channel structures

  • Evaluate variables affecting channel structure

  • Choose the best channel structure

  • Select the channel members


Marketing channel strategy

Channel Design Decision

Phase 1:

Recognize Need for Channel Design Decision

Obvious examples pp. 200-201 in text

But many times the need to make channel design decisions is not obvious


Marketing channel strategy

Channel Design Decision

Phase 2:

Set & Coordinate Distribution Objectives

Become familiar with objectives of firm

Set explicit distribution objectives

Check for congruency


Marketing channel strategy

Channel Design Decision

Phase 3:

Specifying Distribution Tasks

Don’t underestimate all of the “nuts and bolts” necessary to make products and services conveniently available to customers


Marketing channel strategy

Channel Design Decision

Phase 4:

Develop Alternative Channel Structures

Number of levels

Intensity at various levels

Types of intermediaries


Marketing channel strategy

Channel Design Decision

Phase 5:

Evaluate Variables Affecting channel Structure

Market variables

Product variables

Company variables

Intermediary variables

Environmental variables

Behavioral variables

Heuristics play an important role


Marketing channel strategy

Channel Design Decision

Phase 6:

Choosing the “Best” Channel Structure

  • Product-based models (Aspinwall)

  • Financial Approach

  • Transaction Cost Analysis Approach

  • Management Science Approach

  • Judgmental –Heuristic Approach


Marketing channel strategy

Channel Design Decision

Phase 7:

Select the Channel Members

  • Finding perspective channel members

  • Applying selection criteria

  • Securing perspective channel members


Marketing channel strategy

Target Markets and Channel Design Strategy

Work “backwards” from what the final customers wants. A “bottom up” approach.


Marketing channel strategy

Framework for Market Analysis

  • Market geography

  • Market size

  • Market density

  • Market behavior

    • when customers buy

    • where customers buy

    • how customers buy

    • who buys


Who buys

Who Buys?

Who makes physical purchase?

Who uses the product?

Who influences the buying decision?


Channel management

Channel Management

The administration of existing channels to secure the cooperation of channel members in achieving the firm’s distribution objectives


Marketing channel strategy

Motivating Channel Members

  • Find out needs and problems

  • Offer support consistent with channel member needs

  • Provide leadership


Marketing channel strategy

Learning About Channel Members Needs and Problems

  • “Grapevine” (informal communications network)

  • Inside research

  • Outside research

  • Marketing channel audit

  • Distributor advisory councils


Marketing channel strategy

Support for Channel Members

  • Cooperative approach

  • Partnership approach

  • Distribution programming approach


Marketing channel strategy

Product Issues in Channel Management

  • New Product Planning and Development

  • Product Life Cycle

  • Strategic Product Management


Marketing channel strategy

New Product Planning and Development

  • Channel member input

  • Acceptability

  • Fit with channel member assortments

  • Education and training

  • Problems?


Marketing channel strategy

Product Life Cycle

What are the channel management implications during each stage?

Introduction

Growth

Maturity

Saturation

Absolute decline


Marketing channel strategy

Strategic Product Management

  • Product differentiation

  • Product positioning

  • Product line expansion and contraction

  • Trading up and trading down

  • Brand strategy

  • Service strategy


Marketing channel strategy

Pricing in Channel Management

  • Cost

  • Market

  • Competition

  • Channels


Marketing channel strategy

Promotion Through the Channel

Vs.

  • Pull versus Push Promotional Strategy


Marketing channel strategy

Classic Push Promotional Strategies

  • Cooperative advertising

  • Promotional allowances

  • Displays and selling aids

  • In-store promotions

  • Contests and incentives

  • Special promotional deals and merchandise campaigns


Marketing channel strategy

“Kinder and Gentler” Push Promotional Strategies

Training

Quotas

Missionary selling

Trade shows


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