CHANNEL ROLES IN A
DYNAMIC MARKETPLACE
Teacher – Shahed Rahman
Subject – Marketing Channel
Week – 2
GAUSE’S PRINICIPLE
Gause’s Priniciple of
Interspecific competition
relates to channel roles
 Two Protozoa
 Need eight resources to survive
 Both struggle to survive
 If resources are limited – both
can survive
 Not enough resources – one
have to die

CHANNEL RELATIONSHIP MODEL (CRM)
It’s a complex environments where channel
members operate
 Channel members must fight to achieve the
competitive advantage

Competitive Superiority
 Restrictive Ranges
 Character Displacement

COMPETITIVE SUPERIORITY

A Channel member may emerge
as a competitive superior

It can force rivals to take the exit

‘Survival of the fittest’
RESTRICTIVE RANGES
Channel member may differ across distinctive
environmental conditions
 Some prosper in one place while others flourish
in different domains
 Each member recognize its limitation in
environments and choose to compete in a
different environment


Eg. Sears take of themsleves from financial market
and focused on retail business
CHARACTER DISPLACEMENT



Channel members rapidly
evolve in diverse ways
Taking on different properties
to minimize direct competition
Each corporate must
continuously adapt to dynamic
channel environments
CHANNEL BEHAVIORS IN COMPETITIVE
ENVIRONMENTS


Consider Sears, Kmart, Wal-Mart
and Radio Shack.
There stores overlap in the
merchandise they sell, the
customers they serve, and the
areas where they operate. But to
survive, each of there retailers has
had to differentiate itself in
important ways
INTERSPECIFIC COMPETITION IN
MARKETING CHANNELS
How different business
can exist in the same
economic community by
occupying different niches
 Each business must set
itself apart in some
meaningful way to prosper
in competitive markets
eg. Some follow everyday
low pricing
Some follow a
unique product line

CHANGING ENVIRONMENTS: A SHARED
CONCERN


React while environments are
changing to achieve its current
position
In this process channel member
attempt to differentiate itself
from other member operating at
the same level

Eg: Made in USA – Focusing on
quality rather than the price by
saying its better than the
imported goods.
CHANNEL ROLES IN EXCHANGE SYSTEM
Supplier Relationship
 Customer Relationship
 Lateral Relationship

SUPPLIER RELATIONSHIP
Involve three principal channel roles:
 Source


Producers


Sources firms supply raw material
Generate components parts, process materials, or finished
goods
Wholesalers

Market products for resale or institutional use
It was based on branded products
Wholesalers are also performing sales and
marketing functions that has been assigned to
producers
Take physical possession of the goods they market but
they not assume ownership
WHOLESALERS CLASSIFICATION
Wholesaler
Classification
Take
Physical
Possession
Take
Negotiation
Title to Function
Goods Performed
Promotional
Function
Performed
Merchant
Wholesaler
Yes
Yes
Yes
Yes
Manufacturer’s
Sales
Organization
No
Yes
Yes
Yes
Agents /Brokers
No
No
Yes
Yes
Commission
Merchants
Yes
No
Yes
Yes
CUSTOMER RELATIONSHIP
Retailers ( Store and Nonstore)
 Consumers (Individual and Organizational)

Department Stores
 Specialty Stores
 Convenience Stores
 Discount Stores
 Variety Stores
 Supermarket

FOR A BETTER CUSTOMER RELATIONSHIP
Increase in the use of
electronic shopping
 Increase in the use of mail
order catalog/direct mail
 More manufacturer’s outlet –
it’s a fashion in US economy
 Hypermarket – one stop mall –
self service

LATERAL RELATIONSHIP
Involve partnership between firms
operating at the same channel level
 Based on cooperation and trust
 Shared goals and work together to
improve design, quality, delivery,
promotional or manufacturing
Eg- Star Alliance

KEY CHANNEL RELATIONSHIPS AND
CHANNEL ROLES
Channel Relationships
Channel Roles Performed
withing the Relationship
Supplier Relationships
Source
Producers
Wholesalers
Customer Relationships
Retailers ( Store and nonstore)
Consumers (Organizational and
Individual )
Lateral Relationship
Source
↔ Source
Manufacture ↔ Manufacture
Wholesaler ↔ Wholesaler
Retailer
↔ Retailer
ESTABLISHING CHANNEL ROLE
IDENTITIES
Services
 Innovation
 Flexibility
 Timing

DISCUSSION QUESTION
Gause’s Principle of Interspecific Competition
 Compare the role of Wholesalers and Retailers
 Role Expectation
