Chapter 17   Designing and Managing Value Networks and Marketing Channels by

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1. Chapter 17 Designing and Managing Value Networks and Marketing Channels by

2. Establish channels for different target markets and aim for efficiency, control, and adaptability. Kotler on Marketing

3. In this chapter, we focus on the following channel questions from the viewpoint of the manufacturers: What is the value network and marketing channel system? What work is performed by marketing channels? What decisions do companies face in designing, managing, evaluating, and modifying their channels? What trends are taking place in channel dynamics? How can channel conflict be managed? Chapter Objectives

4. What is a Value Network and Marketing-Channel System? Value Network Marketing channel

5. What is a Value Network and Marketing-Channel System? Channel integration characteristics: Ability to order a product online, and pick it up at a convenient retail location Ability to return an online-ordered product to a nearby store Right to receive discounts based on total of online and off-line purchases

8. What Work is Performed by Marketing Channels? Acquire funds to finance inventories at different levels in the marketing channel Assume risk connected with carrying out channel work Provide for the successive storage and movement of physical products Provide for buyers’ payment of their bills through banks and other financial institutions Oversee actual transfer of ownership from one organization or person to another

9. Channel-Design Decisions Push strategy Pull strategy Designing a channel system involves four steps: Analyzing customer needs Establishing channel objectives Identifying major channel alternatives Evaluating major channel alternatives

11. Industrial Marketing Channels

12. Channel-Design Decisions Analyze Customers’ Desired Service Output Levels Lot size Waiting time Spatial convenience Product variety Service backup

13. Channel-Design Decisions Establish Objectives and Constraints Identify Major Channel Alternatives Types of Intermediaries Number of Intermediaries Exclusive distribution Exclusive dealing Selective distribution Intensive distribution

14. Channel-Design Decisions Terms and Responsibilities of Channel Members Price policy Conditions of sale Distributors’ territorial rights Evaluate the Major Alternatives Economic Criteria

15. Figure 17.4: The Value-Adds versus Costs of Different Channels

20. Channel Dynamics Conflict, Cooperation, and Competition Types of Conflict and Competition Vertical channel conflict Horizontal channel conflict Multichannel conflict Causes of Channel Conflict Goal incompatibility Unclear roles and rights Differences in perception

21. Channel Dynamics By adding new channels, a company faces the possibility of channel conflict which may include: Conflict between the national account managers and field sales force Conflict between the field sales force and the telemarketers Conflict between the field sales force and the dealers

22. Channel Dynamics Managing Channel Conflict Diplomacy Mediation Arbitration Legal and Ethical Issues in Channel Distribution Exclusive distribution Exclusive dealing Tying agreements

23. Chapter 18 Managing Retailing, Wholesaling, and Market Logistics by

24. Successful “go-to-market” strategies require integrating retailers, wholesalers, and logistical organizations. Kotler on Marketing

25. Chapter Objectives In this chapter, we focus on the following questions about each marketing intermediary: What major types of organizations occupy this sector? What marketing decisions do organizations in this sector make? What are the major trends in this sector?

26. Table 18.1: Major Retailer Types

27. Retailing Levels of Service Wheel-of-retailing Four levels of service: Self-service Self-selection Limited service Full service

33. Table 18.3: Major Wholesaler Types

34. Wholesaling Trends in Wholesaling Narus and Anderson identified four ways to strengthen relationships with manufacturers Sought clear agreement about their expected function in the marketing channel Gained insight into the manufacturers’ requirements by visiting their plants Fulfilled commitments by meeting volume targets Identified and offered value-added services to help their suppliers

36. Logistics Systems

37. Market Logistics Supply chain management (SCM) Value network Demand chain planning Market logistics Market logistics planning has four steps: Deciding on the company’s value proposition to its customers Deciding on the best channel design and network strategy for reaching the customers Developing operational excellence in sales forecasting, warehouse management, transportation management, and materials management Implementing the solution with the best information systems, equipment, policies, and procedures Integrated logistics systems (ILS)

38. Figure 18.2: Determining Optimal Order Quantity

39. Transportation Modes

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