Marketing Channels: Delivering Customer Value PDF

GIM YC094 6 GLOBALIZATION & INTERNATIONAL MARKETING CH12 MARKETING CHANNELS P. LAVAERTS 2024/25- S1  week...

GIM YC094 6 GLOBALIZATION & INTERNATIONAL MARKETING CH12 MARKETING CHANNELS P. LAVAERTS 2024/25- S1  week 1 2 3 4 5 6 Thursday 19/9 26/9 3/10 10/10 17/10 24/10 chapter - 1 2 3 5 7 strategic part customer consumer marketing value marketing markets partnering strategy & environment & buyer SDP engagement behaviour content 1 2 3 intro questions assignm. observation & observation & observation & deskresearch deskresearch deskresearch toolbox & exam questions toolbox & exam questions toolbox & exam questions  Week+ 7 8 9 10 11 12 13 Thursda 4-8/11 14/11 21/11 28/11 5/12 12/12 19/12 y chapter - 18 8 9 10+11 12 - operational part competitiv product new recap activity distribution e service products pricing (online) week advantage brand & (on demand) content PLC (no lecture) 4 5 6 observation & observation & obs & des assignm. - deskresearch deskresearch toolbox & - toolbox & exam toolbox & exam exam q. questions questions Principles of Marketing 19th Edition Chapter 12 Marketing Channels: Delivering Customer Value Learning Objectives: ASSBAT… 12-1 Explain why companies use marketing channels and discuss the functions these channels perform. 12-2 Discuss how channel members interact and how they organize to perform the work of the channel. 12-3 Identify the major channel alternatives open to a company. 12-4 Explain how companies select, motivate, and evaluate channel members. 12-5 Discuss the nature and importance of marketing logistics and integrated supply chain management. Learning Objectives: ASSBAT… 12-1 Explain why companies use marketing channels and discuss the functions these channels perform. 12-2 Discuss how channel members interact and how they organize to perform the work of the channel. 12-3 Identify the major channel alternatives open to a company. 12-4 Explain how companies select, motivate, and evaluate channel members. 12-5 Discuss the nature and importance of marketing logistics and integrated supply chain management. Additonal to the book: distribution metrics  Supply Chains and Value Delivery Networks Upstream partners Downstream partners supply raw materials, components, include the marketing channels or parts, information, finances, and distribution channels that look toward expertise needed to create a product the customer, including retailers and or service. wholesalers.  Supply Chains and Value Delivery Networks SUPPLY chain DEMAND chain “make and sell” view “sense and respond” view includes the firm’s raw materials, suggests that planning starts with productive inputs, and factory capacity the needs of the target customer 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. 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 functions Information Promotion Contact Physical Matching Negotiation distribution Financing Risk taking The Nature and Importance of Marketing Channels Number of Channel Levels Channel level is a layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer.  direct marketing channel is a marketing channel that has no intermediary levels.  indirect marketing channel is a marketing channel containing one or more intermediary levels. The Nature and Importance of Marketing Channels L E N G T H The Nature and Importance of Marketing Channels Number of Channel Levels Channel members are connected by several types of flows: physical flow of products ownership flow payment flow information flow promotion flow Learning Objectives: ASSBAT… 12-1 Explain why companies use marketing channels and discuss the functions these channels perform. 12-2 Discuss how channel members interact and how they organize to perform the work of the channel. 12-3 Identify the major channel alternatives open to a company. 12-4 Explain how companies select, motivate, and evaluate channel members. 12-5 Discuss the nature and importance of marketing logistics and integrated supply chain management. Additonal to the book: distribution metrics Channel Behaviour and Organisation Channel Behaviour Marketing channels consist of firms that have partnered for their common good with each member playing a specialised role. Channel conflict refers to disagreement among channel members over goals, roles, and rewards. horizontal conflict vertical conflict Channel Behaviour and Organisation Channel Behaviour and Organisation Vertical Marketing Systems Conventional 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. Vertical marketing systems (VMSs) provide channel leadership and consist of producers, wholesalers, and retailers acting as a unified system. Channel Behaviour and Organisation Vertical Marketing Systems Contractual vertical marketing systems consist of independent firms at different levels of production and distribution who join together through contracts. (management contracting) Channel Behaviour and Organisation Vertical Marketing Systems Franchise organization is a contractual vertical marketing system in which a channel member, called a franchisor, links several stages in the production- distribution process. (franchisor vs franchisee) Channel Behaviour and Organisation Horizontal Marketing 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 hybrid Multichannel distribution systems are systems in which a single firm sets up two or more different type of marketing channels to reach one or more customer segments. Channel Behaviour and Organisation Changing Channel Organization Disintermediation is the cutting out of marketing channel intermediaries by producers or the displacement of traditional resellers by new intermediaries. Learning Objectives: ASSBAT… 12-1 Explain why companies use marketing channels and discuss the functions these channels perform. 12-2 Discuss how channel members interact and how they organize to perform the work of the channel. 12-3 Identify the major channel alternatives open to a company. 12-4 Explain how companies select, motivate, and evaluate channel members. 12-5 Discuss the nature and importance of marketing logistics and integrated supply chain management. Additonal to the book: distribution metrics  Channel Design Decision Identifying Major Channel Alternatives Number of Marketing Intermediaries intensive distribution convenience goods selective distribution shopping goods exclusive distribution luxury goods Learning Objectives: ASSBAT… 12-1 Explain why companies use marketing channels and discuss the functions these channels perform. 12-2 Discuss how channel members interact and how they organize to perform the work of the channel. 12-3 Identify the major channel alternatives open to a company. 12-4 Explain how companies select, motivate, and evaluate channel members. 12-5 Discuss the nature and importance of marketing logistics and integrated supply chain management. Additonal to the book: distribution metrics Distribution metrics: how to grow by optimizing distribution parameters? Distribution metrics: Case: Water brands are sold in 5.000 shops (=food retailers) in the country. Actually San Pellegrino has a MS (market share) of 4.0%. The marketing manager of San Pellegrino wants to grow its business in terms of MS to 4.7% in 2024 by optimizing San Pellegrino’s distribution position. Together with the sales manager they reflect on the case. What are their options? Distribution metrics: Numerical Distribution (ND%) “Can we increase the number of shops where our brand is present?” 2023 2023 2024 2024 (actual) (actual) (budget) (budget) ND nr. of shops nr of shops nr. of shops nr. of shops (N) (%) (N) (%) market 5,000 100 5,000 100 San Pelligrino 800 16.0 875 17.5 ND: numerical distribution (%): number of shops where the brand is present total number of shops present in the market (all brands) Distribution metrics: Numerical Distribution (ND%) Conclusion: Thanks to an increase in terms of number of shops, San Pellegrino will probably be able to grow its sales. What more do we have to consider, seen the growth potential in ‘number of shops’ from 16 to 17,5%? Distribution metrics: Weighted Distribution (WD%) “What about the sales potential of these shops? Has every shop the same sales potential?” 2023 2023 2024 2023 (actual) (actual) (budget) (budget) WD turnover of turnover of turnover of turnover of shops shops shops shops (million €) (%) (million €) (%) market 2,000 100 2,000 100 San Pelligrino 400 20.0 450 22.5 WD: weighted distribution (%): turnover of all shops where the brand is present turnover of all shops present in the market (all brands) Distribution metrics: Weighted Distribution (WD%) Conclusion: We manage to increase our ‘reach’ in terms of sales potential, by aiming at shops with a higher sales potential than we had before. How good was our ‘selection’ of those new additional shops? Distribution metrics: Selection Indicator (SI) “How good has been our ‘shop selection’ or what’s the ‘quality’ of the shops we selected?” SI 2023 2024 San (actual) (budget) Pellegrino (%) (%) WD 20.0 22.5 ND 16.0 17.5 SI 1.25 1.29 SI: selection indicator: weighted distribution (WD) numerical distribution (ND) Distribution metrics: Selection Indicator (SI) Conclusion: We manage to increase the quality (=in terms of sales potential) of the shops selected. Is this a guarantee that we will also sell more San Pellegrino? Not sure yet, but at least we have a solid basis… Distribution metrics: Selection Indicator (SI) What else can we learn from this metric? if SI < 1.0 if SI = 1.0 if SI > 1.0  Distribution metrics: Share In Handlers (SIH) “Of course we still must roll out our marketing programme to build up our share at any shop where present.” SIH 2023 2024 San (actual) (budget) Pellegrino (%) (%) MS = market share MS 4.0 4.7 SIH = MS/WD The turnover share of San Examples: Pellegrino versus total WD 20.0 22.5 turnover of water of all 2023: 4.0/0.200 = 20.0% brands in the market SIH 20.0 20.9 2024: 4.7/0.225 = 20,9% SIH: share in handlers (also called ‘outlet share’): turnover of the brand within the shops where present total turnover of the shops where the brand is present Distribution metrics: What else can we do to optimize our presence in the selected distribution? Work on our OTIF, OOS and all ‘abilities’… Distribution metrics: On Time In Full (OTIF) (%) “How performant are our logistics in terms of deliveries to the shops selected?” OTIF On Time On Time San ok not ok Pellegrino In Full ok 1 0 In Full not ok 0 0 Only when an order (placed by an outlet) has been delivered by the supplier on time & in full it is considered to be valid. Distribution metrics: OTIF% When is a supplier considered to be a reliable partner by retailers? OTIF % > ? Distribution metrics: Out Of Stock (OOS) (%) “How performant are we in the shelf in terms of presence?” OOS 2023 2024 San (actual) (budget) Pellegrino (%) (%) OOS 5.0 4.0 OOS: out of stock (%): the total euro value of sales lost due out-of-stock supply issues the total euro value of customer sales over the same period of time Distribution metrics: OTIF% We manage to have less OOS which will result in higher sales. Attention: a too high OOS level will lead to ‘delisting’ in the shelf. Distribution metrics: the ‘ability’ issue visibility findability reachability affordability/payability transportability (to home) stockability (at home)