Principles of Marketing. by Jeff Tanner and Mary Anne Raymond

Transcription

1 Principles of Marketing by Jeff Tanner and Mary Anne Raymond

2 Chapter 8 Using Marketing Channels to Create Value for Customers 2010 Flat World Knowledge, Inc.

3 Marketing Channels and Channel Partners Learning Objectives 1. Explain why marketing channel decisions can result in a product s success or failure. 2. Describe the different types of organizations that work together as channel partners and what each partner contributes Flat World Knowledge, Inc. 3

4 Consumer Behavior Today, consumers are used to getting: What they want What When When they want it Where they want to get it Where or 2010 Flat World Knowledge, Inc. 4

5 Consumer Behavior They buy a competing product! Getting the product requires distribution channels in a timely manner to the consumer 2010 Flat World Knowledge, Inc. 5

6 Marketing Channels The simplest marketing channel consists of a and a. Most products involve other parties called who are positioned between the producer and the consumer. These perform useful functions benefitting both the producer and the consumer. These functions are called utilities such as: f ti p p i e 2010 Flat World Knowledge, Inc. 6

7 Channel Partners Channel partners are essential for marketing to achieve its objectives of having the right time the right place at the right product in

8 Types of Channel Partners The most frequent partner types are: W \ Distributors\ R Obtain quantities Store and break down into units Take title to (they them) Assume risk of selling and obsolescence B, Agents, and Manufacturers Representatives Do take title to goods or services Match a buyer a seller and receive a commission 2010 Flat World Knowledge, Inc. 8

9 Types of Channel Partners Department Stores Specialty Stores Super Stores -- Hypermarkets -- Super Target Retailers That Sell to End Users Warehouse Clubs --Sam s --Costco Grocery Supermarkets 2010 Flat World Knowledge, Inc. 9

10 Nonstore Retailing Not all retailing is conducted through stores! There is a growing trend in: door to door sales party selling interaction such as vending machines TV telemarketing (do not call data base) 2010 Flat World Knowledge, Inc. 10

11 Key Takeaways How you get the product is a marketing channel. Channel decisions are as important as features and prices of products. Channel partners are firms that actively promote and sell products; producing companies try to get the best channels to get a competitive edge Flat World Knowledge, Inc. 11

12 Typical Marketing Channels Learning Objectives 1. Describe basic types of B2B and B2C markets. 2. Explain aspects of using multiple and alternate channels. 3. Explain the pros and cons of disintermediation. 4. Channels used to enter foreign markets Flat World Knowledge, Inc. 12

13 D vs. I Channels There are two classes of distribution channels: D Typically this is a transaction between the and the end user. I Consists of between the producer and the user. A company that fields a is an example of a direct channel. Some indirect channels take title, others such as agents do not Flat World Knowledge, Inc. 13

14 Disintermediation Cutting out the middleman: Some companies take on the middleman's role to reduce costs and improve profits. The trend today is towards disintermediation. The Internet is a facilitator. This is not always cost effective or efficient. It is not always possible, as Dell found out Flat World Knowledge, Inc. 14

15 Multiple and Alternate Channels Marketing channels can become complex and confusing. Wholesalers Retailers Brokers 2010 Flat World Knowledge, Inc. 15

16 Multiple Channels Multiple channels can be effective, but it requires channel management understanding 2010 Flat World Knowledge, Inc. 16

17 International Marketing Channels Company growth requires participation in international markets. Key question is how to obtain distribution. Some countries have extensive distribution avenues that must be navigated. Third world countries may lack any good intermediary systems Flat World Knowledge, Inc. 17

18 International Marketing Channels Key concerns for distributing in other countries: 1. Unstable governments and corruption 2. Bribery as a way of doing business 3. Foreign currency exchange rates 4. Product features and cultures 2010 Flat World Knowledge, Inc. 18

19 Key Takeaways Direct channel consists only of producer and user. Indirect channels employ intermediaries. Multiple channels are used to reach more customers and increase effectiveness. Disintermediation removes channel intermediaries to improve profits. Other ways to participate are direct foreign investment, franchising, joint ventures, and strategic alliances Flat World Knowledge, Inc. 19

20 Functions Performed by Channel Partners Learning Objectives 1. Describe the activities performed by channels. 2. Explain which organizations perform which functions Flat World Knowledge, Inc. 20

21 Push Pull Strategies Push Strategy Pull Strategy Producer incents channels to move more product Producer incents end user to request product Push and pull are discussed in greater detail in Chapter Flat World Knowledge, Inc. 21

22 Channel Functions Channel partners: sort and regroup products store and manage inventory distribute products assume ownership (take title) and take risk extend credit aid in possession share marketing and other information assure availability to end users 2010 Flat World Knowledge, Inc. 22

23 Key Takeaways Different organizations in a marketing channel are responsible for different value added activities. Activities include: disseminating marketing information promoting brands sorting and regrouping products storing and managing inventory distributing products assuming risks of products 2010 Flat World Knowledge, Inc. 23

24 Marketing Channel Strategies Learning Objectives 1. Describe the factors that affect a firm s channel decisions. 2. Explain how intensive, exclusive, and selective distribution differ from one another. 3. Explain why some products are better suited to some intensity-of-distribution strategies than others Flat World Knowledge, Inc. 24

25 Channel Selection Factors Consumer or Business Type of Customer Customer Preferences Perishable Type of Product Fragile Channel Partner Capabilities Channel vs. Company Abilities Target Market Reach 2010 Flat World Knowledge, Inc. 25

26 Channel Selection Factors The business environment and technology the state of the economy foreign exchange rates the enabling abilities of the Internet Competing products marketing channels How do competitors sell their product? Sometimes a unique channel offers competitive advantages Flat World Knowledge, Inc. 26

27 Modes of Distribution Intensive distribution The objective is to maximize outlets for product to assure the widest availability. Selective distribution The objective is to appeal to different markets. Exclusive distribution The objective is to appeal to a specific market and control brand image Flat World Knowledge, Inc. 27

28 Key Takeaways Channel selection can mean the difference between success and failure. Channel selection depends on type of customer and products. Channel selection may be influenced by competitor channels. Decisions of intensity, selectivity, and exclusivity affect channel decisions Flat World Knowledge, Inc. 28

29 Channel Dynamics Learning Objectives 1. Explain channel power. 2. Describe channel conflicts. 3. Describe how channel members achieve cooperation Flat World Knowledge, Inc. 29

30 Channel Dynamics Channel power Strong channel partners become leaders. Leaders can call the shots, getting what they want. Category killers have channel power. Channel conflict Disputes among channel members. Channel members have their own goals which may not be shared. Arises when producers compete with channel members. Vertical and horizontal conflict Vertical conflict occurs when members are in same channel. Horizontal conflict occurs when members are in separate channels Flat World Knowledge, Inc. 30

31 Achieving Channel Cooperation Requires channel management Emphasize the benefits of working together Provide channel members with promotional material Educating channel members on the products and selling techniques Avoid channel stuffing, i.e., moving product into the channel to record sales Handle pricing issues in an ethical and legal manner 2010 Flat World Knowledge, Inc. 31

32 Key Takeaways Channel leaders wield power. Channel conflict occurs when channel members have a dispute. Vertical conflict occurs between in-channel members. Horizontal conflict occurs when channels compete with each other. Channel cooperation can be enhanced by proper management of members Flat World Knowledge, Inc. 32

33 Marketing Channels vs. Supply Chains Learning Objectives 1. Understand the difference between channels and supply chains. 2. Describe the components of supply chains Flat World Knowledge, Inc. 33

34 Channels vs. Supply Chains The chain of supply is a holistic view of all of the entities involved in the sourcing, production, and distribution of products. Raw materials and components Assembly and production Moving finished goods to users and consumers 2010 Flat World Knowledge, Inc. 34

35 Supply Chains and Management Upstream suppliers are not considered channel partners. They are not involved with selling the products. Producers have begun looking at them, however, as they are instrumental in the overall process. Also involved with success or failure of a producer are the transportation companies needed to move products and raw materials. Producers are constantly assessing their supply chains and making changes to improve efficiencies and effectiveness. This is called supply chain management Flat World Knowledge, Inc. 35

36 Supply Chain: Key Takeaways All of the that figure into any part of the process of producing, promoting, and delivering an offering to its user are part of the. Suppliers of raw materials and components, along with transportation companies, are considered channel partners, as they are not involved in the process of selling. The process of and a supply chain is called supply chain Flat World Knowledge, Inc. 36