Marketing Channels and Customer Value

Rocio Rodriguez's Background

• Rocio Rodriguez holds a PhD in Business Science from Murcia University, Spain
• She has 18 years of experience in business-to-business sales and sales management
• Her work focuses on marketing management for an international healthcare software company
• She has been a professor at the University of Murcia and ENAE Business School for a combined 17 years (12 years part-time and 5 years full-time).
• She is an adjunct researcher at Kristiania University College
• Rodriguez publishes in peer-reviewed academic journals and presents at international conferences
• Her research interests include personal selling, sales management, sustainability, business model, technology, and B2B relationships

Marketing Channels: Delivering Customer Value

• This topic covers supply chains and value delivery networks, nature and importance of marketing channels, channel behavior, channel design and management decisions, public policy and distribution decisions, and marketing logistics and supply chain management.
• Supply chain partners are categorized as upstream—raw material, components, parts, information, finances and expertise to produce a product or service; and downstream—marketing channels or distribution that deliver to the customer.
• A supply chain's "make and sell" view centers on the firm's raw materials, productive inputs, and factory capacity. Conversely, a demand chain "sense and respond" view prioritizes customer needs, tailoring the firm's response.
• A value delivery network involves suppliers, distributors, and customers collaborating to improve overall system performance.

Marketing Channels - How Channel Members Add Value

• Intermediaries help producers increase efficiency by making goods accessible to target markets. Through experience, specialization, and scale of operations, intermediaries often provide more value than a company could accomplish on its own.
• Economically, channel members shape product assortment to match consumer needs.
• Time, place, and possession gaps are bridged by intermediaries to make goods and services available to users.

Channel Behavior and Organization

• Marketing channels involve firms working together for mutual benefit, each member having a specific role.
• Channel conflict occurs when members disagree over goals, responsibilities, and rewards. There are both horizontal (conflict between members at the same level) and vertical (conflict between members at different levels) types of channel conflict.
• Conventional distribution systems involve independent producers, wholesalers, and retailers. There is limited control over other members, and no formal process for resolving disagreements.
• Vertical marketing systems (VMS) have cohesive producer, wholesaler, and retailer systems. They include corporate (single ownership), contractual (agreements between independent parties), and administered (large firm leadership).
• Franchise systems are a common form of contractual VMS where a company grants a license to operate its business under the company's name and methods.
• Administered VMS systems rely on size and power of dominant channel members for leadership.
• Horizontal marketing systems have companies at the same level join together to exploit new marketing opportunities, often combining resources. Multichannel systems employ multiple channels to target various customer segments.
• Disintermediation occurs when producers cut out intermediaries and go directly to consumers

Channel Design Decisions

• Channel decisions involve analyzing consumer needs, setting objectives, identifying alternative channels, and evaluating options using economic, control, and adaptive criteria.
• Analyzing consumer needs involves understanding customer demands from the channel, specifying segments to target, and the best channels to use while minimizing costs.
• Setting channel objectives is about setting target levels of customer service, balancing consumer needs and the costs of meeting those needs while also considering customer price preferences.
• Identifying major channel alternatives is concerned with types of intermediaries, number of intermediaries, and roles/responsibilities of channel members. Distribution strategies are classified as intensive (many outlets), exclusive (limited outlets), and selective (a balance).
• Evaluation is concerned with economic, control, and adaptive criteria. International channel design must adapt to different country structures

Channel Management Decisions

• Channel management entails selecting, managing, motivating, and evaluating channel members. Best supply chain KPIs are identified.

Public Policy and Distribution Decisions

• Distribution policy involves examining exclusive distribution, exclusive dealing, exclusive territorial agreements, and tying agreements, which often face regulatory scrutiny.

Marketing Logistics and Supply Chain Management

• Marketing logistics involves planning, implementing, and controlling the physical flow of goods, services, and information. Logistics aims to move goods/services to customers at a profit, and is closely aligned with supply chain management. In supply chain management, firms oversee the upstream and downstream flows of goods/services/information among suppliers, the company, resellers, and final consumers.
• Major logistics functions include warehousing, inventory management, transportation, and logistics information management.
• Warehousing decisions include the number, type, and location of warehouses and distribution centers.
• Inventory management involves just-in-time systems, RFID technology, smart shelves, and automatic order placement.
• Transportation factors into pricing, delivery performance, and product condition upon arrival. Options include truck, rail, water, pipeline, air, and internet.
• Logistics information management involves EDI (electronic data interchange) and VMI (vendor-managed inventory) to optimize information flow, and facilitates business/customer communication.

Integrated Logistics Management

• Integrated logistics management is recognizing that delivering customer service and streamlining costs requires internal and external teamwork.
• Third-party logistics (3PLs) involves outsourcing logistics functions to specialized providers.