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Success Strategies in Channel Management. Marketing Channels. Components of Customer Value form, place, possession, and time. Marketing Channels Creating Customer Value via Channels of Distribution\. Marketing Channels: Structure and Functions. Customer Relationship Management

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Components of Customer Value form,


possession, and


Marketing Channels Creating Customer Value via Channels of Distribution\

Marketing Channels: Structure and Functions

Customer Relationship Management

Three types of channel relationships exist:Supplier Relationships.

Customer Relationships.

Lateral Relationships.

Demand-Side Factors Facilitation of Search, Adjustment of Assortment Discrepancy, Routinisation of Transactions Reduction in Number of Contacts.


Marketing Channel Membership

What Is The Work Of The Marketing Channel?

marketing channels
Marketing channels facilitate the exchange process.

A marketing channel can be defined as an array of exchange relationships that create customer value in the acquisition, consumption, and disposition of products.

Exchange relationships emerge from market needs as a way of serving those market needs.

Creating Customer Value via Channels of Distribution\

Organizations take part in marketing channels because they receive a certain value, known in economics as exchange utility, from their participation.

Exchange utility is the sum of all costs and benefits realized separately or jointly by all the persons or organizations participating in an exchange relationship.

Marketing Channels
components of customer value
Components of Customer Value.
  • For customers, marketing channels create
  • form,
  • place,
  • possession, and
  • time
  • utilities.
marketing channels structure and functions
Running a marketing channel is a "process." It is not an event.

Delivery of Value frequently takes time to accomplish, and even when a transaction is made – a sale, the exchange relationship with the end-user is usually not over. For example, think about a purchasing a piece of equipment and its demands for post-sale service.

Why Are There Marketing Channels and Why Do They Change?

We focus on two sources of impetus for channel development and change: demand-side and supply-side factors.

Marketing Channels: Structure and Functions
demand side factors
Facilitation of Search.

Marketing channels containing intermediaries arise partly because they facilitate searching.

If intermediaries did not exist, suppliers without a known brand name would be unable to generate many sales.

Adjustment of Assortment Discrepancy.

The sorting function performed by intermediaries includes the following activities:

Sorting out.



Demand-Side Factors
supply side factors
Routinisation of Transactions.

Each purchase transaction involves ordering, valuating, and paying for products. The buyer and seller must agree on the amount, mode, and timing of payment.

Routinisation also leads to standardization of products for which performance characteristics can be easily compared and assessed. It encourages production of items that are highly valued.

Reduction in Number of Contacts.

Intermediaries reduce the number of contacts necessary to cover a market.

Supply-Side Factors
what is the work of the marketing channel
The work of the channel includes the performance of several marketing flows.

One important flow that permeates all the value-added activities of the channel: the flow of information.

There is an important truth about channel design and management: One can eliminate or substitute members in the channel, but the flows performed by these members cannot be eliminated.

Cutting costs out of a channel system must not jeopardize the delivery of a value offer in a timely fashion to end-users.

What Is The Work Of The Marketing Channel?
marketing channel membership
The key members of a marketing channel are producers, intermediaries (wholesale, retail), and facilitators/specialized intermediaries, and end-users (organisational/institutional/business customers or consumers). The presence or absence of a particular type of channel member is dictated by its ability to perform the necessary channel flows to add value to end-users.




Producers' reps, agents, and brokers

Retail intermediaries

Facilitators (sometimes also called Specialized Intermediaries)

Marketing Channel Membership
end users
  • Finally, it is important to note that end-users (either institutional/business customers or individual consumers) are themselves channel members as well.
  • We classify consumers as marketing channel members because they can and frequently do perform channel flows, just as other channel members do.
customer relationship management
The Customer Relationship Model, suggests that coexistence, or partnering, is necessary to successfully meet the challenges of channel environment. Consider the following assessment (italics added for emphasis):

Business life, is in fact fundamentally cooperative. It is only within the bounds of mutually shared concerns that competition is possible.'

Customer Relationship Management
channel roles in the exchange system
Channel Roles in the Exchange System

Three types of channel relationships exist:

Supplier Relationships.

Customer Relationships.

Lateral Relationships.

Establishing Channel Role Identities

The overriding purpose of channels is to serve end-user needs.

For this to happen, each channel member must perform the tasks appropriate to its own particular role.

How do channel members establish role identities?

Several divergent perspectives on how channel members differentiate themselves are summarized within the term SIFTing: