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The Internet as Channel. Role of channel as a resource The Internet and channel types Mix implications Channel issues for perspectives. Channel as a Resource: Overview. What is a channel? Purpose: to move stuff from supplier to buyer Nature: interdependent firms as intermediaries

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the internet as channel

The Internet as Channel

Role of channel as a resource

The Internet and channel types

Mix implications

Channel issues for perspectives

channel as a resource overview
Channel as a Resource: Overview
  • What is a channel?
    • Purpose: to move stuff from supplier to buyer
    • Nature: interdependent firms as intermediaries
  • How is the Internet a channel?
    • Enables distribution
    • Enables and acts as intermediary
  • What are the effects of the Internet…
    • On channel characteristics?
    • As channel component, on mix elements?
the internet and distribution the future through the past
The Internet and Distribution: The Future Through the Past
  • Traditional forms of channel structure
    • Manufacturer-->Consumer
      • Ex.: Land’s End
    • Manufacturer-->Retailer-->Consumer
      • Ex.: anything you buy at WalMart
    • Manufacturer-->Wholesaler-->Consumer
      • Ex.: Sam’s Club
    • Man.-->Whole.-->Ret.-->Con.
      • Ex.: Grocery stores
impact of the internet the past present
Impact of the Internet: The Past, Present
  • As a channel
    • Which companies can do this?
      • Depends on product type
        • E.g., digital are most direct
      • Depends on channel relationships
        • Producer and retailer (need strong producer)
        • Producer and consumer (nature of contacts)
  • As a channel component
    • Disintermediation (most hyped possibility)
    • Reintermediation (most likely possibility)
characteristics of disintermediation
Characteristics of Disintermediation
  • Elimination of one or more middlemen
    • e.g., Direct sales by producer to buyer
    • Related factors
      • More effective when producer has more power
      • More effective when consumer relationships are less important
        • I.e., less specific market
        • More for B2C than B2B?
      • In toto, when barriers to entry are lower
  • Likely victims of disintermediation
  • http://www.napster.com/whatisnapster.html
  • http://download.cnet.com/
another option reintermediation
Another Option: Reintermediation
  • Introduction of new middlemen
    • Infomediaries
    • Aka, “cybermediaries”
  • Characteristics of infomediaries
    • Constitute online brands
    • Reflect new way to create relationships
          • http://www.barbie.com/mydesign/look.asp
    • Occupy different niche in channel structures
      • From transferring product
      • To creating buyer/seller links
    • Function as service, not as product
mix implications of the internet as a channel resource
Mix Implications of the Internet as a Channel Resource
  • Channel and Product
    • A digital bias?
    • Issues for determining product strategy
      • Digital form as replacement or complement?
      • Effects on product assortment (virtual aggregation)
        • Coordination benefits for inventory and warehouse costs
      • Effects on product development
        • Supply chain coordination
        • Virtual integration?
  • Channel and Price http://computers.cnet.com/hardware/resellers/1,10231,0-1079-311-129432,00.html?st.cn.1078-7-1463354.subdir.1079-311-129432
    • Disintermediation effects
    • Reintermediation effects
more mix implications
More Mix Implications
  • Channel and Place
    • Effects of the channel on the end of the channel
      • Online stores
        • Lower physical costs
        • Tax advantages
        • Virtual inventory advantages
      • The emergence of reverse netcentricity
      • Global distribution
  • Channel and Promotion
    • Information as what gets transferred
    • Global reach
      • Target appropriateness issues (channel affects content)
      • Channel as means for contact (personalization, customization)
do you have a problem with this
Do You Have a Problem with This?
  • Issues for marketers: feasibility
    • Channel relationships
      • Power and conflict
      • Leveraged cooperation
    • Impact of shopping agents as infomediaries
  • Issues for consumers: availability
    • Real v. ephemeral benefits
    • Product availabilty (Toys-R-Us at Xmas…)
  • Issues for policymakers: liability
    • Illegal consumption (e.g., drugs and alcohol)
  • Issues for technology: stability
    • Reliability of channel delivery (e.g., hackers)
    • System/process development (e.g., extranets as Internet EDI)