Notes BMK 332 PDF

Chapter 1  3. Trends driving the shift to omnichannels trend 1. Channels participants operate in a connected World trend 2. Cross-channel shopping ( showrooming +...

Chapter 1  3. Trends driving the shift to omnichannels trend 1. Channels participants operate in a connected World trend 2. Cross-channel shopping ( showrooming + webrooming trend 3.. Altered shopping norms (pricing) ↑Rend 4. More to services /Reduction of inventories) trend 5 targeted promotions and customer insight. /design + integrate ( 4. The omnichannel ecosystem · An ecosystem "a complex network of interconnected systems" or everythi - that exists in a particular environment is an apt term to describe a firms go to market strategy and associated sales channels. · an omnichannel ecosystem integrates domains that are often analyzed separately BLB domain , the channel intermediary :. I ⑤ 1) Retailing 2) wholesaling 3) Franchising 4) international channels 4 2 The Four. pillars of an omnichannel strategy 1. Harnessing customer knowledge. 2 leveraging technology 3. Managing channel relationships 4. Assessing channel performance 4 3. challenges faced in developing an omni-channel strategy. Alternative 5 channel formats · May stem from any of the three sections of the traditional distribution Channel > - Manufacturer, distributor or customer  Take-aways 1. The growth of online channels led firms to utilize multi-channel strategies where channels typically operate in silos as separate entities with less than optimal integration and insufficient coordination. It also led to disintermediation with well-entrenched intermediaries being removed from the channel value chain. 2. Today, the focus is moving from a multi-channel to an omni-channel strategy where firms seek integration of the customers’ ability to research, purchase, communicate, engage with, and consume a brand such that the customer experience across online, physical, mobile, social, and communication channels is frictionless and optimized. 3. The key players in a channel system include the manufacturers who are upstream channel members, intermediaries like wholesalers, retailers who are intermediate channel members, and end-users who are the downstream channel members. 4. The key distinction between omni-channel and multi-channel is one of seamless integration versus disjointed silos and that omni-channel captures the notion of customer engagement in its DNA. 15  Take-aways (continued) 5. The trends driving the migration to omni-channels are that consumers live in a connected world where they engage in cross-channel shopping. Thus shopping norms have been altered and this, coupled with the move to services and the ability to generate deep consumer insights and create a custom, targeted experience for end-users, necessitates a move to an omni-channel world. 6. We view channel strategy as operating in an ecosystem. 7. The key to an omni-channel strategy is to integrate across channels and consumer touchpoints to create a transparent, seamless, and unified brand experience for the end- user. 16  Week 3 1. Importance of Marketing channel strategies Marketing interdependent organizations that · channels are act as a team and operate on trust · They synchronize the customer experience across multiple channels The channel provides gateway blu the manufacturer and end-user the · channel experience determines people's perceptions of the manufacturers brand image and end-user satisfaction. Why do marketing channels exists ? · To balance the benefits of interacting directly with end-users and its incremental costs · service outputs are the benefits that intermediaries in the channel provide to both upstream and downstream channel members What is the keypole of intermediaries in marketing channels ? Intermediaries necessarily participate in channels because marketing · they both add value and help reduce costs.. key functions 2 marketing channels perform definition : Range of functions or processes that channel members perform at different · points in time Channel functions : tenets · channel functions take different forms at different points of the channel · Not every channel member needs to participate in every channel function · specialization is a hallmark of an efficient channel · channel functions are attributed to members that add value or Reduce cost] · It is possible to eliminate or substitute the members of a channel but not the Functions theyPerform. · A channel should eliminate a member only if the function it performs can be more done effectively or less expensively by other channels members Designing channel structures and strategies A channel manager conducts analysis to determine the degree of channel · intensity , mix of channel types , cost gaps and service gaps · The level of intensity of channelRelates to the number of channel partners Competing For customers : · Intensive distribution : Retail outlets · selective distribution : Few outlets · exclusive distribution : I outlet. 3 Auditing Marketing Channels Channel Marketing is a productive activity · just as the machines in a plant produce physical products the members of d , market channel are engaged into producing something intangible. · productivity of a channel derives from the value end-users place on the service Outputs · channel productivity audit : A process that evaluates each channel members capability to provide service outputs efficiently · The evaluation considers the level and cost of the service outputs · the evaluation is done over the nine channel functions ). The channel-efficiency template 4 The multi-channel manager develops to uses tools to audit channel members callabilities to execute functions · assessed in terms of cost and value · Palmatier et al (2020) propose an efficiency template to visualize : 1. The types and amounts of work done by each channel member. 2 The. importance of each channel function to the provision of outputs & cost and benefits (. The share of total 3 channel profits that channel members should reap. · The efficiency template is a judgmental and intuitive tool that integrates in one picture cost and value deductions. · add equity  Equity principle · A member's level of compensation in the channel systems should reflect its of degree participation marketing functions and the value created in the by such participation. Compensation should mirror the normative profit shares of each member. · Reward each channel member in accordance with the value it creates. · violations of the equity principle constitute a primary cause of channel conflict which could be costly to manage.. Channel 5 analysis gap What are they ? · Channel gaps are imbalances in the channel associated with service and cost levels identify service gaps and lost gaps ,. What creates channel gaps ? · environmental : business environment · Managerial : competencies and decisions  Week 4 1. Power-definition The ability of one channel member (A) to get another channel member (B) to do something otherwise would not have done Rationale of power in multi-channels · Interdependence : organizations operating on trust and balancing cost/ benefit of end users they must interacting with the : function as if they are pursuing a single shared interest · complexity marketing : channels systems of players that depend on one are another , with dissimilar objectives , and motivated by profit. Negative connotations · Abuse · Inequity * A tool-great benefits can be oppression · Brutality achieved through judicious use · Exploitation of power.. 2 Dependence as - the mirror image of power · We Recognize is depends more heavily on A when it : · obtains greater utility (value benefits satisfaction) From , , A and · has access to fewer alternative sources of that utility.  1) ependence : utility x alternative scarcity · FF B derives little value From A B's dependence is low. , · If A provides greater value butB can readily find , other sources to provide the same value B' dependence is still low. , D = UXS ; low utility is like by 0. multiplying · combined analysis - Reveals the dependence of your channel member on you and thus your level of power. · look at utility and searcity separatly Utility - you mustRecognize your channel partner's goals and now your offering helps it meet those pursuits. · scarcity - 2 things 1. Potential competitors ? 2. determine how easily the channel member can switch From YourOrganization to a competitor. Ways to approximate dependence of utility and scarcity : proxy indicators of dependance · percentage of sales or profits : estimates the percentage or sales or profits earned by the partner that the Focal channel member provides. Role performance : · Dependence approximations can come from assessments of how well the Focal actor performs its Role compared with competitors. Dependence is never one way - both channel perspectives > ~ X dependi on P to provide utility. P needs X for different types of Utility. They are interdependent ; they have high mutual dependence. High balanced dependence blocks exploitation because each side has countervailing · , , power which it can use for self-protection ,. · high mutual dependence or interdependence is synonymous with high mutual , power. Imbalanced dependence · one channel member may become much more dependent than another. the imbalance of less dependent member whereas power favours the , the more dependent member suffers exposure to exploitation. · Exposure leads to problems. the more dependent party loses out in both , economic terms and noneconomic benefits · Imbalanced dependence is not necessarily detrimental · some imbalanced dependence works well in stable environments. · Both dependence and interdependence complete the picture. they both have PROs and Cons. · Dependence motivates Relationship quality and cooperation · Interdependence encourages Relationship-specific investments and performance improvements by increasing the stakes for both parties 3. Power-based influence strategies 4 Channel commitment and trust. Why do relationships matter in marketing channels ? · channel management is about motivating and incentivizing interdependent yet independent entities to maximize the common good. Motivation becomes more in an omnichannel environment · challenging strong channel relationships means a genuine commitment willingness to , engage and compromise · commitment : I organization wants the relationship to continue indefinitely · sacrifices : are needed to maintain the growth of the Relationship (ex : short-term profits giving What are the key motives for building channel relationships for upstream and downstream members ? Building Channel commitment · channel members that want to build commitment start by building the expectation that prospective partners will be doing business for a long time · continuity expectations increase in the presence : > - TRUST > - 2-way communication > A Reputation for fair dealing - A long lasting > - Stable Relationship > - BalancedDower > - combined stakes StrategiesFor building commitment (suppliers and distributors selectivity by the supplier gives you some degree of protection from competitor · : that might sell the same brand. · specialized investment : suppliers might seek to build assets that are dedicated to yourRelationship and that cannot be redeployed in connection with another distributor. Build channel trust · A strong relationship requires mutual commitment , and commitment Occur without tRust cannot · It obviously would be a mistake to invest resources sacrifice opportunities , and build a future with a party bent on exploitation and deception. · A Reasonable level of trust is necessary for any channel relationship to function and for the maintenance and management of business relationship · Trust in a channel member is conceptualized as confidence that the other party is honest (stands by its word) , together with assessments of the other as benevolent and interested in one's welfare. party · economic satisfaction is positive and affective to economic Rewards. · Role of non-economic factors (fairness , no coercion(. The Channel Relationship cycle 5 Multi-channel vs omni-channel · An Omnichannel approachRequires deep, seamless integration across multiple channels. · Multi-channel Setup , the channels instead tend to act as separate entities , to maximize its own utility with minimal Reward + each seeking , awareness. · Omni-channel Requires the parties to commit at a deeper level which may , include relationship specific investments. Accordingly interdependence often - , is greater in an omni-channel context.  Week 1. The nature of channel conflict 5 What is channel conflict ? channel conflict arises when behavior by one channel member is in opposition to the wishes or behaviors of its Channel Counterparts. · channel actor seeks a goal or object that its counterpart currently controls one member of a channel views its upstream and downstream partner as an adversary or opponent · These interdependent parties , at different levels of the channel upstream + downstream contest with each other For Control , · omni-channel context : Conflict can be exacerbated if the firms treat each channel separatly (rather than ensuring synergy). Type of channel conflict · latent (inherent) conflict describes the inevitable collision blu channel members that pursue their own separate goals , strive to maintain their autonomy and compete for limited Resources · perceived (cognitive emotionless) conflict arises , as soon as a member senses any opposition viewpoints perceptions sentiments interests or intentions. : , , , · Felt IOR affective) conflict arises as when emotions enter the picture and can escalate into manifest conflict. · Manifest conflict is expressed visibly through behaviors (i. e blocking. each other's initiatives support or goal achievement , withdrawing  Measuring channes conflict 4) steps : 11 count the issues 2) Assess importance 3) Determine disagreementFrequency 4) Measure dispute intensity conflict= [ = 1 Important : x Frequency : x Intensity i Interpretation of Results - NO Real argument exists over any issue if it : · is pretty low importance · Rarely Sparks a difference of Opinion (low Frequency ( · Does not create substantial distance D/W 2 parties (low intensity If any of these elements are low the issue is not a genuine source , of conflict /multiplying by 0 creates a product of Of. consequences 2 of conflict Conflict is functional when it drives channel members to improve their performance Functional conflict implies that members Recognize each other's contributions and understand that their success depends on others , so they can oppose each other without damaging their arrangement. As a Result of their opposition, they : 1. communicate more frequently and effectively 2 establish outlets for. expressing their grievances. 3 Critically Review their past actions 4. Devise and implement a more equitable split of system Resource 5 Develop a more balanced distribution of power in their relationship.. Develop standardized ways to deal with Future conflict and keep it 6 within Reasonable bounds. Conflict Reduces Ihannel performance Manifest · Manifest conflict is expressed visibly through behaviors (i. e. blocking each other's initiatives or goal achievement Withdrawing support , · High levels of Manifest conflict can reduce an organization's satisfaction and damage the channel's long-term ability to function as a close partnership. · High channel friction creates unnecessarycosts and derives less value to partner conflict will increase its anticipated disappointment by inflating the local firms · belief that there are better alternatives available · conflict will undermine channel partner's commitment and damage partners' trust in their counterparts. channel managers need to determine if the costs of conflict are worth the benefits that conflict might induce. conflict needs to be managed Rather than minimized. 3 Major sources of conflict in channels conflict is Rooted in differences blw channel members 1. channel members' goals -> Each channel member has a set of goals and objectives that differ from the goals and objectives of other channel members. The inherent difference in what they want and what they value causes principals to achieve to seek wall to monitor and motivate agents EX : Nike Footlocker. , 2. perception of Reality > - Distinct perception of Reality induce conflict because they imply the livelihood , of Divergent Responses to the same situation. Misperceptions are so common due to Focus. The supplied focuses on its products and its processes Downstream. channel members focus on its functions and customers. Ex : Toyota 3. Intra-channel competition > - suppliers may sense conflict if their downstream Partners Represent their Competitors. > Agentsand Resellers Rely on this tactic to provide high coverage and lower prices - > - Intra-channel competition Can Spark disputes especially if the downstream , agent appears insufficiently dedicated to meeting its responsibilities to the Supplier. - Intra-channel competition implies that the supplied relies on various direct competitors to sell its product to the market ex : oakley , sunglass not 4) conflict in omni-channels omni-channel strategy can be breeding ground for conflict The use of multiple channels is now the norm.  suppliers and multiple channels as they can easily find each other · customers like and fulfill needs appropriate channel using the most FOR SUPPlieR : · Increase market penetration · Better view of multiple markets · Raising entry barriers to potential competitors FORCUSTOMERS : · Increases chances of finding a channel that meets their customer demands. customers can pit one channel another (to seek lower prices against · The dangers of multiple channels are similar to the dangers of intensive distribution. suppliers · By adding new channels suppliers may reduce breadth and vigor of market Representation. · suppliers assume that adding channels help to serve distinct segments Yet. customers can more across categories , behaviors can change or overlap. Downstream channel members · May lose motivation and withhold support (passive Response ( Can Retaliate or exit the supplier's channel structure lactive Response · customers Free-riding gaining from one channel land then using another · - Environment supporting multiple channels without increasing conflict 1. Growing markets which offer opportunities to many players. , Markets in which customers perceive the product 2. category as differentiated Dso. channel members can distinguish their offerings. Markets 3 in which buyers' consistent purchasing style involves one type of channel I so customers are less likely to seek competing channels Markets that are not dominated. by buying groups 4. unwanted channels : gray markets is the sale of authorized branded products through unauthorized · Gray Marketing , distribution channels usually bargain/discountcutlets that provide less customer - service thanauthorized channels do ex : Omega watches sold at costco ·. conflict is inevitable in an omnichannel setting Because the distinct entities +Ry to coordinate their activities , to deliver a seamless experience to the end-user. Much of the conflict is likely to be functional in that it drives the parties , to work together to iron out their various issues and debates. Conflict Resolution strategies 5 How do channel members cope with conflicts ? I approaches are identified : 11 KeepConflict From escalating intoDysFunctiona Te · boards and norms. 2) Adopt Patterns of behaviour for Resolving conflicts after they become manifest  Forestalling through institutionalization conflict > - channel members lan institute policies to address conflicts in early stages , or even before itarises. 1) Information intensive mechanisms : Heads off conflict by creating a better means to share information. It can be risky and expensive since both sides divulge sensitive information and must devote resources to communicating. 2) Third-partyMechanisms : Mediation and arbitration the most widely used third , party mechanism introduce third parties that are not , involved in the channel 3) Building Relational norms : Relational norms are policies that can proactively devised consciously put into place and continually maintained , by management to forestall conflict or address it once it Occurs Norms entail expectation about behavior ,. shared by all members. 1) Flexibility 2) info exchange 3) solidarity incentives Economic incentives work well, almost universally 4) Using : , Regardless of their personalities players or history of the relationship. Appealing , to economic self-interest is a highly effective way to settle disputes. Good negotiators base their arguments on economics , then combine them With in program of communications good a & strong interpersonal working Relationship.  Week 1. Retailing : nature and 6 classification Retailing consists of the activities involved in selling goods and services to ultimate · consumers of their personal consumption. · A Retail sale is one which the buyer is the ultimate consumer , Rather than a business or institutional prechaser. · A wholesale sale Refers to purchases for Result OR for business , industrial or institutional uses. The Retail sale is personal buying motive for a of family satisfaction stemming · from the consumption of the item being purchased · Retailing also includes sales of services , not just goods. undergoing significant changes. classification ofRetailers supermarkets Hypermarket/supercenter > The quest for higher profit · : - · Warehouse ClUDs : costco margins leads to Retail · Department stores : Nordstrom iC , Penny diversification which in turn , adds , Specialty stores · : Apple pressure to channel members. · discount stores : Walmart target, · convenient stores + drugstores · non-store Retailers : E-commerce. Retail landscape 2 Main ChallengesRetailers confront : · Enhancement of Dig data + tech : Move into omni-channel strategy · > - more complete , more interlinked, > - integration of physical and online formats more current data to target just. > - stock the same items online and offline > - But more resources dedicated to > - standardized pricing scheme across in- dataanalytics and applications. store and electronic channels Both trends are susceptible to increase sales : Omni-channel data management , big  3. Retail positioning strategies When a Retailer chooses its positioning strategy , Recognize the it must potential effects of the strategy on competitiveness and performance 1. cost-side positioning strategies Types · High-service Retailing system : margins are higher , but turnover is lower. Low price Retailing system : low margins high inventory turnover but minimal · , , service levels Cases low-priceRetailing systems of Walmart and Home Depot maintain lower margins · and high turnover while improving on service levels From a channel perspective the increases low-margin/ high turnover strategy · , operational efficiency but in the case of Costco , transfers costs to the customer who ends up taking on channel functions A Retail will Reflect on the Retailer's financial objectives strategy · · · A Retailer's financial performance could be based on Reducing operating expenses cost sides or on increasing sales Idemand-side · TheStrategic Profit Model-SPM is a tool Retailers Use to summarize the factors affecting Firm's a financial performance , as measured by Return on assets. · The SPM focuses on assets (their turnover and their Returns) It measures the profits. that a Retailer makes in Relation to the assets it owns. The Strategic Profit Model-SPM It starts With the concept of net soles defined , as gross sales less customer Returns and allowances : 3 components 1. Margins , or the Ratio of profit to sales. Every Retailed should seek to manage its margins I net profit/ net sales ,. Asset turnover (net sales/total assets) which captures the Retailers efficiency 2 , in creating Revenue from the assets it has deployed. Put another way , it captures the amount of assets that need to be deployed to generate a certain amount of Revenue.. 3 Financial leverage measured by an equity multiplier (total assets /net Worth), which demonstrates how leveraged a Retailer is. the conventional goal is to secure a target return on its net worth (net profit/ net worth) Retail performance measures > 3 interrelated performance measures further suggest ways for Retailers to - improve profitability. 1. GROSs Margin Return on Investment (GMROI l Ex : What is the Retail performance of a product ?. GROSS 2 Margin per Full-time equivalent Employee (GMROL Ex : What is the optimization Return Rate of hiring extra employees during the holiday season ?. GROSS 3 Margin per Square Foot (GMROS) EX : What is the Return Rate from allocating a shelf space to a Manufacturer ? GROSS Margin Return on Inventory (GMROI) The gross margin (% ) x inventory at cost Ratio of sales to > - GMROI is used most in measuring the performance of products within a single merchandise category. > - The measure permits the buyen to look at products with different gross margin % and different Rates of inventory turnover and make a relatively quick evaluation as to which are best performers.  DeptA has the. highest sales Dept B-c have similar sales , (has higher margins. D is overlooked - ↓ sales + margins DKGMROI , lower margins is offset by its higher inventory turns.. Demand-side 2 positioning strategies > EVERY Retailer would love to earn higher margins and higher Merchandise - turnover and lower retailing costs , likely impossible. > - Retailers Consider what service outputs it will privilege based on the following : 1. Bull-breaking. 2 spatial convenience. 3 waiting anddelivery time 4. product variety and product assortment. Customer 5 Service · A taxonomy orRetailer types showing demand-side positioning strategies. Retail Channels 4 consumer's shopping behaviour has changed , it might even be called hybrid increasingly comfortable with buying through multiple channels > - consumers are and types of outlets. > - Moreover , the hybrid behaviour varies not just by segment but also by purchase occasion.  > Hybrid shopping behaviour thatdesigning a Retail strategy involves - means careful consideration of the process the consumer undergoes to make the purchase. > - The dominant location' consideration for the consumer is convenience , defined in terms of ease and speed of access. 4.I Internet Retail channels · E-commerce is widely used as a Retail channel although it also serves wholesale considerations. · The proportion of all Retail sales consummated through e-commerce keeps increasing. · online Retailers also have emerged as 'information storehouses' that incorporate video , detailed text products, product Reviews and algorithms descriptions of Internet Retail channels are more important for some product lines than others · · Brick-and-mortar Retailers still capture a significant % of sales in many categories. 4 2. Direct selling channels · Direct selling involves the sale of a consumer product or service in a Face toFace manner away from a fixed Retail location. · Direct selling organizations (DSOs) use several techniques toReach final customers. · DSO Rely on downstream intermediaries sometimes called distributors consultants , of sales people · DsO are different than pyramid schemes.. 4. 3 Hybrid Retail channels · NU Single Retail Form is likely sufficient to Reach a market or satisfy a particular segment channel managers Recognize 3 Routes to market : · 1) Brick-and-Mortar channels / consumers ignore online 2) online channels (consumers Ignore brick and Mortar 3) Hybrid channel (consumers obtain some service inputs online and others offline consumers value having more than one way to access desired products · * There is growing consensus that online and offline channels are both substitutes For and complements of each other ! what can go wrong in hybrid retail channels ? · unstandardized pricing schemes or discounts ex1 : discount coupons honour at physical stores and not online. EX2 : different prices in online vs offline · dissimilar stockage of items online and offline Ex : Shoppers identify a desirable item in theonline store , physical location doesn't have it anymore.. 5 Retail POWER what explains that shift ? 1. Industry saturation and low margins in Retail. The sales in Retail have a low grow Rate (approaching saturation). Retailers must steal sales from competitors , pressure manufacturers and ask them for price concessions. Quest 2 for higher productivity via economies of scale. Retailers continuously seel) to increase their productivity with larger Retail formats this , approach elevates their fixed cost and pushes them to generate enormous sales 3. Changing Role of buyers and buying centres. Focus has changed from purchasing and maintaining balanced inventories. Buying centres became profit CentersResponsibleFor service levels.. 4 Retailers are resourceful and have alternatives. Retailers can threaten not to buy from certain manufacturers because the market offers Many alternatives. benefit their own profit 5. suppliers are also to blame for their "growth' approach· Introduce thousands of new products that need to find their way onto retailers shelves. Engage in trade promotion. Many tool to Further their power : 1) Forward buying 2) slotting allowance 3) Failure feel 4) private branding