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1. Chapter 17 Designing and Managing Value Networks and Marketing Channelsby
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 Logisticsby
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