Ch 1 Channel Concepts PDF

Part 1: Marketing Channel Systems CHAPTER 1 Marketing Channel Concepts ©2013 Cengage Learning. All Rights Reserved. May not be scanned,...

Part 1: Marketing Channel Systems CHAPTER 1 Marketing Channel Concepts ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole  ① The growing importance of marketing channels ② The definition of marketing channels ③ How marketing channels relate to strategic variables in the marketing mix Objectives ④ The flows in the marketing channels and Learning their relationship to channel management ⑤ The principles of specialization, division of labor, and contactual efficiency ⑥ The difference between the concepts of channel structure and of ancillary structure 2 ©2013 Cengage ©2013 Cengage Learning. All Rights Learning. Reserved. All Rights May not May Reserved. be scanned, not becopied or duplicated, scanned, copiedoror posted to a publicly duplicated, or accessible posted towebsite, in whole a publicly or in part. website, in whole accessible Objectiv e Why the growing importance of 1 marketing channels? 1 The explosion of information technology and E-commerce 2 A greater difficulty in gaining a sustainable competitive advantage 3 The growing power of distributors, especially retailers in marketing channels 4 The need to reduce distribution costs 3 ©2013 Cengage ©2013 Cengage Learning. All Rights Learning. Reserved. All Rights May not May Reserved. be scanned, not becopied or duplicated, scanned, copiedoror posted to a publicly duplicated, or accessible posted towebsite, in whole a publicly or in part. website, in whole accessible  1 The explosion of information technology and E-commerce 2 A greater difficulty in gaining a sustainable competitive advantage 3 The growing power of distributors, especially retailers in marketing channels 4 The need to reduce distribution costs The prediction: Disintermediation – reduction of number of Yahoo! intermediaries eBay Amazon.co The reality: m Reintermediation – evolution of a new type of intermediary 4 ©2013 Cengage ©2013 Cengage Learning. All Rights Learning. Reserved. All Rights May not May Reserved. be scanned, not becopied or duplicated, scanned, copiedoror posted to a publicly duplicated, or accessible posted towebsite, in whole a publicly or in part. website, in whole accessible  1 The explosion of information technology and E-commerce 2 A greater difficulty in gaining a sustainable competitive advantage 3 The growing power of distributors, especially retailers in marketing channels 4 The need to reduce distribution costs Place (distribution), or Marketing Channel Sustainable Strategy competitive advantage Potential for gaining competitive advantage because place is more difficult for competitors to copy 5 ©2013 Cengage ©2013 Cengage Learning. All Rights Learning. Reserved. All Rights May not May Reserved. be scanned, not becopied or duplicated, scanned, copiedoror posted to a publicly duplicated, or accessible posted towebsite, in whole a publicly or in part. website, in whole accessible  1 The explosion of information technology and E-commerce 2 A greater difficulty in gaining a sustainable competitive advantage 3 The growing power of distributors, especially retailers in marketing channels 4 The need to reduce distribution costs Power retailers as Gatekeepers of consumer markets Act as buying agents for customers rather than as selling agents for manufacturers ©2013 Cengage ©2013 Cengage Learning. All Rights Learning. Reserved. All Rights May not May Reserved. be scanned, not becopied or duplicated, scanned, copiedoror posted to a publicly duplicated, or accessible posted towebsite, in whole a publicly or in part. website, in whole accessible  1 The explosion of information technology and E-commerce 2 A greater difficulty in gaining a sustainable competitive advantage 3 The growing power of distributors, especially retailers in marketing channels 4 The need to reduce distribution costs Marketing channels are the most recent target for reducing distribution costs. The focus is on channel structure and management. ©2013 Cengage ©2013 Cengage Learning. All Rights Learning. Reserved. All Rights May not May Reserved. be scanned, not becopied or duplicated, scanned, copiedoror posted to a publicly duplicated, or accessible posted towebsite, in whole a publicly or in part. website, in whole accessible Objectiv e 2 What is a marketing channel? Outside the firm Firm involved in negotiatory Management’s functions involvement in the process External contactual organization that management operates to achieve its distribution objectives Goals that change, causing variations in contactual organization & the way in which management operates it 8 ©2013 Cengage ©2013 Cengage Learning. All Rights Learning. Reserved. All Rights May not May Reserved. be scanned, not becopied or duplicated, scanned, copiedoror posted to a publicly duplicated, or accessible posted towebsite, in whole a publicly or in part. website, in whole accessible  What is a channel manager? Anyone in a firm or organization who is involved in marketing channel decision making ©2013 Cengage ©2013 Cengage Learning. All Rights Learning. Reserved. All Rights May not May Reserved. be scanned, not becopied or duplicated, scanned, copiedoror posted to a publicly duplicated, or accessible posted towebsite, in whole a publicly or in part. website, in whole accessible Objectiv e How does marketing channel 3 strategy relate to the rest of the marketing mix? Marketing Mix or Challenges the four Ps Product Limited ability to gain and hold competitive advantage Price Price wars erode profitability & provide unstable basis for sustaining competitive advantage Promotion Expensive and short-lived Place Marketing channels support & enhance (Distribution other Ps to meet demands of target ) markets ©2013 Cengage ©2013 Cengage Learning. All Rights Learning. Reserved. All Rights May not May Reserved. be scanned, not becopied or duplicated, scanned, copiedoror posted to a publicly duplicated, or accessible posted towebsite, in whole a publicly or in part. website, in whole accessible  The change of focus to channel strategy Creates competitive advantage with long-term viability Builds strong relationships between manufacturers and channel members Based on trust, confidence, and people power 11 ©2013 Cengage ©2013 Cengage Learning. All Rights Learning. Reserved. All Rights May not May Reserved. be scanned, not becopied or duplicated, scanned, copiedoror posted to a publicly duplicated, or accessible posted towebsite, in whole a publicly or in part. website, in whole accessible  Channel Strategy and Logistics Management Part of distribution variable Concerned with entire process of Focused specifically starting and on providing product operating contactual availability at organization appropriate time & Formulated before place logistics ©2013 Cengage ©2013 Cengage Learning. All Rights Learning. Reserved. All Rights May not May Reserved. be scanned, not becopied or duplicated, scanned, copiedoror posted to a publicly duplicated, or accessible posted towebsite, in whole a publicly or in part. website, in whole accessible Objectiv e Marketing Channel Flows 4 Product Flow Negotiation Flow Ownership Flow Information Flow Promotion Flow ©2013 Cengage ©2013 Cengage Learning. All Rights Learning. Reserved. All Rights May not May Reserved. be scanned, not becopied or duplicated, scanned, copiedoror posted to a publicly duplicated, or accessible posted towebsite, in whole a publicly or in part. website, in whole accessible  Product Flow Manufacturer Transportation Company Wholesalers Retailers Consumer ©2013 Cengage ©2013 Cengage Learning. All Rights Learning. Reserved. All Rights May not May Reserved. be scanned, not becopied or duplicated, scanned, copiedoror posted to a publicly duplicated, or accessible posted towebsite, in whole a publicly or in part. website, in whole accessible  Negotiation Flow Manufacturer Wholesalers Retailers Consumer ©2013 Cengage ©2013 Cengage Learning. All Rights Learning. Reserved. All Rights May not May Reserved. be scanned, not becopied or duplicated, scanned, copiedoror posted to a publicly duplicated, or accessible posted towebsite, in whole a publicly or in part. website, in whole accessible  Ownership Flow Manufacturer Wholesalers Retailers Consumer ©2013 Cengage ©2013 Cengage Learning. All Rights Learning. Reserved. All Rights May not May Reserved. be scanned, not becopied or duplicated, scanned, copiedoror posted to a publicly duplicated, or accessible posted towebsite, in whole a publicly or in part. website, in whole accessible  Information Flow Manufacturer Transportation Company Wholesalers Retailers Consumer ©2013 Cengage ©2013 Cengage Learning. All Rights Learning. Reserved. All Rights May not May Reserved. be scanned, not becopied or duplicated, scanned, copiedoror posted to a publicly duplicated, or accessible posted towebsite, in whole a publicly or in part. website, in whole accessible  Promotion Flow Manufacturer Advertising Agency Wholesalers Retailers Consumer ©2013 Cengage ©2013 Cengage Learning. All Rights Learning. Reserved. All Rights May not May Reserved. be scanned, not becopied or duplicated, scanned, copiedoror posted to a publicly duplicated, or accessible posted towebsite, in whole a publicly or in part. website, in whole accessible Objectiv e Distribution through 5 intermediaries Factors that determine the role of intermediaries Technology The Internet Economic Specialization & Considerations Division of Labor Contactual Efficiency ©2013 Cengage ©2013 Cengage Learning. All Rights Learning. Reserved. All Rights May not May Reserved. be scanned, not becopied or duplicated, scanned, copiedoror posted to a publicly duplicated, or accessible posted towebsite, in whole a publicly or in part. website, in whole accessible  Specialization & Division of Labor Distribution Tasks Production Tasks Distributed Distributed Inter-organizationally intraorganizationally ©2013 Cengage ©2013 Cengage Learning. All Rights Learning. Reserved. All Rights May not May Reserved. be scanned, not becopied or duplicated, scanned, copiedoror posted to a publicly duplicated, or accessible posted towebsite, in whole a publicly or in part. website, in whole accessible  Contactual Efficiency Granada Guitar Co. Negotiation Estimated Dollar Distributio Contactua Effort Costs of Inputs n l Objective Efficiency (Output) 100 sales @ $50 = Get 500 Negotiatio visits $5,000 music n effort in 100 phone @ 3 = stores to dollar calls 300 carry new terms 20 magazine @1,000 = guitar relative to 20,000 line achieving ads the distributio $25,300 n objective = $25,300 ©2013 Cengage ©2013 Cengage Learning. All Rights Learning. Reserved. All Rights May not May Reserved. be scanned, not becopied or duplicated, scanned, copiedoror posted to a publicly duplicated, or accessible posted towebsite, in whole a publicly or in part. website, in whole accessible Objectiv e Channel Structure v. Ancillary 6 Structure Channel Structure Why are single- channel The group of channel members structures to which a currently set of distribution tasks has been the exception? allocated Ancillary Structure Why is managing the ancillary The group of institutions that structure most assist channel members in likely to be less performing complex than distribution tasks managing the channel structure? ©2013 Cengage ©2013 Cengage Learning. All Rights Learning. Reserved. All Rights May not May Reserved. be scanned, not becopied or duplicated, scanned, copiedoror posted to a publicly duplicated, or accessible posted towebsite, in whole a publicly or in part. website, in whole accessible  Discussion Question #1 ROCKAUTO.COM is a leading online auto parts store that prides itself for offering a huge selection of auto parts, everyday low prices, fast shipping, and an easy-to-use Web site. Some ROCKAUTO.COM advertisements have even claimed that this online auto parts store is “head and shoulders” above any brick and mortar auto parts store. The company’s slogan, “All The Parts Your Car Will Ever Need,” suggests that customers have all the choice they could possibly want from ROCKAUTO.COM and that they need look no further than this online auto parts store to satisfy all their needs. ©2013 Cengage ©2013 Do you agree with ROCKAUTO.COM’s claim? Cengage Learning. All Rights Learning. Reserved. All Rights May not May Reserved. be scanned, not becopied or duplicated, scanned, copiedoror posted to a publicly duplicated, or accessible posted towebsite, in whole a publicly or in part. website, in whole accessible  Discussion Question #3 Growth in online retail sales has been outstripping conventional sales in retail stores. This online sales growth might be enhanced significantly by the latest online sales phenomenon of mobile commerce—shopping via mobile smart phones such as Apple’s iPhone, Research in Motion’s Blackberry, or Google’s NexusOne. But so far, of the almost 50 million smart phone users that have access to the Internet, only about 7 million (under 15%) have actually bought something through their phones during the course of a year. Do you think mobile commerce via smart phone will grow rapidly in the future? Why or ©2013 why not? ©2013 Cengage Cengage Learning. All Rights Learning. Reserved. All Rights May not May Reserved. be scanned, not becopied or duplicated, scanned, copiedoror posted to a publicly duplicated, or accessible posted towebsite, in whole a publicly or in part. website, in whole accessible  Discussion Question #5 One of the major themes presented in this chapter is the need for choice as to how products and services are made available to customers. Thus, multi-channel strategies that provide a wide range of channels including an Internet based online channel option have become imperative. Yet there are very successful firms that take a virtually opposite view by purposely limiting choice. A case in point is Edward Jones, a financial services company with the largest network of brokerage offices in the U.S.—more than 10,000 and still growing. Edward Jones has a Web site that its customers can visit but it does not offer its customers the option of trading online. Instead, all transactions must take place through an Edward Jones broker. Even with this single channel strategy, the company is still growing and is very profitable. Why do you think Edward Jones has been able to ©2013 “buck the trend” toward multi-channel strategy that ©2013 Cengage Cengage Learning. All Rights Learning. Reserved. All Rights May not May Reserved. be scanned, not becopied or duplicated, scanned, copiedoror posted to a publicly duplicated, or accessible posted towebsite, in whole a publicly or in part. website, in whole accessible