Marketing in Business Environments PDF

Marketing in Business Environments Session 07 PLACE / MARKETING CHANNELS Abdurrahman Ameen Lecturer – APIIT Business School  Describe the key elements behind Netflix’s innovative channel distribution strategy. Despite its recent successes, what threats does Netflix face in the futur...

Marketing in Business Environments Session 07 PLACE / MARKETING CHANNELS Abdurrahman Ameen Lecturer – APIIT Business School  Describe the key elements behind Netflix’s innovative channel distribution strategy. Despite its recent successes, what threats does Netflix face in the future?  Learning Objectives Objective 1: Explain why companies use marketing channels and discuss the functions these channels perform. Objective 2: Discuss how channel members interact and how they organize to perform the work of the channel. Objective 3: Identify the major channel alternatives open to a company. Objective 4: Explain how companies select, motivate, and evaluate channel members. Supply Chains and the Value Delivery Network Producing a product or service and making it available to buyers requires building relationships not only with customers but also with key suppliers and resellers in the company’s supply chain. This supply chain consists of upstream and downstream partners. Upstream from the company is the set of firms that supply the raw materials, components, parts, information, finances, and expertise needed to create a product or service. Marketers, however, have traditionally focused on the downstream side of the supply chain—the marketing channels (or distribution channels) that look toward the customer. Downstream marketing channel partners, such as wholesalers and retailers, form a vital link between the firm and its customers Supply Chains and the Value Delivery Network Upstream partners are firms that supply raw materials, components, parts, information, finances, and expertise needed to create a product or service. Downstream partners include the marketing channels or distribution channels that look toward the customer, including retailers and wholesalers. Supply Chains and the Value Delivery Network Supply chain “make and sell” view includes the firm’s raw materials, productive inputs, and factory capacity. Demand chain “sense and respond” view suggests that planning starts with the needs of the target customer. Supply Chains and the Value Delivery Network Value delivery network is composed of the company, suppliers, distributors, and, ultimately, customers who partner with each other to improve the performance of the entire system..  The Nature and Importance of Marketing Channels The Nature and Importance of Marketing Channels Marketing channel (distribution channel) is a set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user. The Nature and Importance of Marketing Channels How Channel Members Add Value Transform the assortment of products into assortments wanted by consumers. Bridge the major time, place, and possession gaps that separate goods and services from users The Nature and Importance of Marketing Channels How a Distributor Reduces the Number of Channel Transactions The Nature and Importance of Marketing Channels How Channel Members Add Value 01 02 03 04 Information Promotion Matching Gathering and distributing Contact Developing and spreading Shaping offers to meet the information about Finding and engaging persuasive communications buyer’s needs, including consumers, producers, and customers and prospective about an offer activities such as downstream other actors and forces in buyers. manufacturing and assembly, the marketing env. grading and packaging. 05 06 07 08 Negotiation Reaching an agreement on Physical distribution price and other terms so Transporting and storing Financing Risk taking that ownership or goods. Acquiring and using funds Assuming the risks of possession can be to cover the costs of the carrying out the channel transferred. channel work. work. The Nature and Importance of Marketing Channels Number of Channel Levels The Nature and Importance of Marketing Channels Number of Channel Levels Connected by several types of flows Physical flow of products Flow of ownership Payment flow Information flow Promotion flow Channel Behavior and Organization Channel Behaviour and Organisation Channel Behaviour Marketing channels consist of firms that have partnered for their common good with each member playing a specialized role. Channel conflict refers to disagreement among channel members over goals, roles, and rewards. Horizontal conflict Vertical conflict Multi Channel Conflict  Channel Behaviour and Organisation Vertical Marketing Channels / Systems Conventional / vertical distribution systems consist of one or more independent producers, wholesalers, and retailers, each separate business seeking to maximize its own profits, perhaps even at the expense of profits for the system as a whole.  Channel Behaviour and Organisation Horizontal Marketing Channels / Systems , Horizontal marketing system is a channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity.  Channel Behaviour and Organisation Multi Channel Marketing Systems , Multichannel distribution systems are systems in which a single firm sets up two or more marketing channels to reach one or more customer segments Channel Design Decisions Channel Design Decisions Analyzing Setting consumer Channel needs Objectives Identifying Evaluating Channel Channel Alternatives Alternatives  Channel Design Decisions Analyzing consumer needs Find out what target consumers want from the channel Identify market segments Analyzing Determine the best channels to use consumer Minimize the cost of meeting customer needs Setting Channel service requirements Objectives Identifying Evaluating Channel Channel Alternatives Alternatives  Channel Design Decisions Setting Channel Objectives Setting Determine targeted levels of customer service Channel Balance consumer needs against costs and Analyzing Objectives customer price preferences consumer needs Identifying Evaluating Channel Channel Alternatives Alternatives  Channel Design Decisions Setting Channel Objectives Types of intermediaries refers to channel Analyzing Setting consumer Channel members available to carry out channel work. needs Objectives Most companies face many channel member choices. Evaluating Intensive distribution—a strategy in which they Channel Alternatives stock their products in as many outlets as Identifying possible. Channel Exclusive distribution - in which the producer Alternatives gives only a limited number of dealers the exclusive right to distribute its products Selective distribution—the use of more than one but fewer than all of the intermediaries who are willing to carry a company’s products  Channel Design Decisions Setting Channel Objectives Analyzing Setting consumer Channel needs Objectives Identifying Channel Evaluating Economic criteria Alternatives Channel Control issues Alternatives Adaptability criteria Channel Management Decisions Channel Management Decisions Selecting Selecting Motivating Evaluating channel channel channel channel members members members members Q&A [email protected]