National University of Singapore
NUS Business School
Department of Marketing
BMA5511
Channel Management and Pricing
Lecturer:
Prof Trichy V. Krishnan
Email: krishnan@nus.edu.sg
Phone: (65) 6516 3008
Session:
Semester I, 2009/2010
This is a course that is meant for two important marketing mix variables, channel
management and pricing.
Channel Management
Not much attention is usually paid to understanding marketing channels in detail. In fact
people used to call channels the ‘dark continent’ of marketing that is best left to
‘truckers’. But, is this true? Think of the following:
1. Wal-Mart owners are the richest in the world. And Wal-Mart is the biggest company
in the world!
2. Chinese suppliers to OEMs are moving up the chain and thereby restructuring the
channel market down the chain! (Lenovo!)
3. Dell is selling through WalMart and Courts in Singapore!
4. Dell and HP are at loggerheads in the printer on-line selling format.
5. While Dell and Gateway tried unsuccessfully at having their own physical stores (or
kiosks), HP moved successfully in to on-line format through acquiring Compaq.
6. GM’s failure is partly attributed to its expensive dealer network.
7. Many dot-coms failed to replace the traditional channels in the B2C markets, proving
many business visionaries and management gurus totally wrong. But success is
coming in gradually in the B2B sector!
8. Caterpillar proclaims that their wholesalers are their breadwinners.
9. Domino’s Pizza’s 30 minute delivery positioning redefined the pizza industry; FedEx
has come to mean any quick delivery. And, UPS offers not only simple mail deliveries
but logistics as well (also called 3PL and 4PL).
10. Many travel agencies were marked for extinction when airlines went direct to the
consumers but they are bouncing back with a new set of strategies!
11. Name-brand manufacturers supply many private label grocery goods.
12. Will WalMart and Carrefour wipe out the mom & pop stores in Asia, a feat they
achieved in the US and Europe?
This list of observations clearly shows the strategic impact that the channels have on the
market place. I can list more! Channels are no longer the dark continent of marketing
but are actually the dominating power in the marketing chain. Compared to other
strategic elements of marketing, channels differ in at least three ways. First is the long
term commitment/impact of channel related decisions; second is the existence and
implications of channel ‘power play’ because power is not contained in one company but
distributed across many independent companies in the channel; third is the market
dynamics caused by channel changes such as the internet. All these issues are very
difficult to comprehend and solve if we do not understand what channels are for. This
course is designed to help you to systematically analyze the various channel functions
and strategies to adopt to address these strategic issues. Mastering the principles that
will be discussed in this course will help you in understanding the Supply Chain issues as
well. Please note that this course is NOT about supply chain management.
BMA5511 Channel Management & Pricing
Semester I, 2009/2010, Prof Trichy Krishnan
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Pricing
The one element of marketing strategy that is malleable, but is least understood and
hence constantly feared by many managers is pricing. This is because pricing is a very
complex issue. On one hand, it is supposed to reflect all the strategic steps the company
has taken to bring the product to the consumer and convince him/her to buy it as well.
On the other hand, it is supposed to reflect what the consumer would get out of the
product by paying that price to acquire it. Will there be a match between the two?
Perhaps and perhaps not! This dilemma makes it imperative for a manager to
understand and analyze the various factors before deciding at an appropriate pricing
strategy. And, pricing does not operate in vacuum. It has to be married with other
elements of the marketing strategy, including the channel management. Thus,
understanding the broader picture of the various elements of pricing, and building a
scientific framework on pricing will always be reliable and better in the long run.
Text Books
“Marketing Channels,” by Anne Coughlan, Erin Andersen, Louis Stern and Adel ElAnsary, a Prentice Hall publication, 7th edition.
“The Strategy and Tactics of Pricing,” by Thomas T. Nagle and John Hogan, Prentice Hall,
4th edition1.
Grading
The case reports (team work) will constitute 40% of the grade. There will be a project
(team work again) for the 10% of the grade. 40% is from the 3 quizzes (individual
performance) and 10% is from the peer evaluation on your contribution to the team
work2.
Office Hours
You can reach me any time by email (krishnan@nus.edu.sg) or 6516-3008 and let me
know a day in advance if you want to meet in my office.
About me
I graduated with Honors in Bachelor of Engineering from Madras University in India and
worked for 6 years as a Marketing Executive with a leading automobile company in India
before enrolling in the Ph.D. program of the University of Texas at Dallas in 1989. After
obtaining my Ph.D. degree in 1994, I worked as a marketing faculty for three years in
the Netherlands, with Rice University in Houston for next 5 years, and joined NUS in Jan
2003. I have published research papers in top marketing journals (four focusing on
channel related issues, two on pricing) and have written two award winning case studies.
I also do consulting on marketing of new products, pricing and channel issues.
Prentice Hall, the publisher of both the books, has magnanimously agreed to give a single bundled price for
these two instead of charging them separately. The bundle price is $ 75.20 which is much lower than the total
price of $120 or so (i.e. if they are sold separately).
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If you have problems with your team members, please get them sorted out immediately. If you want to opt
out of your team, please let me know within the first two or three weeks. Towards the end of the course i.e. in
the period Nov 13 to Nov 20, I would like each member of a team to rate his/her team members on a scale of
1 to 5 (1 being the worst contribution and 5 being the best contribution) and send to me by email. If I don’t
receive any email from you, I would assume that you rate all of your team members as 5.
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BMA5511 Channel Management & Pricing
Semester I, 2009/2010, Prof Trichy Krishnan
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Course Schedule
Week
Topic of Discussion
1
Channel System’s key drivers
2
Segmentation, SOD
3
Channel Flows, Flow providers
4
Gap Analysis
5
Channel Power and Conflict
6
Vertical Integration
Franchising
7
Retailing, e-channel
8
Cost based pricing?
9
Pricing: Fundamental drivers
(Value)
10
11
Pricing: Fundamental drivers
(Value)
Price Sensitivity and Optimal
pricing
12
Pricing competitively
13
Other issues in Channel and
Pricing (Grey markets)
14
Cases to Prepare3 /
Readings4/Quizzes/Articles
Skim: Chapter 1
Read: Chapter 2.
Submit Report 1 on Rohm & Haas
HB Case: 587055
Prepare to discuss the Consistent Assortment paper
Read: Chapters 3 and 4
Submit Report 2 on Atlas-Copco-A
HB Case: 588004
Read: Chapters 5
QUIZ-1 (closed book) on Page 19-27
Course Project start: Toyota: Demand Chain
Mangement5. HB Case/Stanford GS42
Read: Chapters 6 and 7, and the Guaranteed Profit
Margin research paper.
Submit report 3 on GINO (China) case
HBS/IVEY: 902A013
Read: Chapters 9, 12
Submit report 4 on Pizza Hut Thailand case
HBS/IVEY: 903A24
Read Chapter 10
Submit report 5 on Louis Vuitton IVEY: 9B08A020
Submit report 6 on Arrow Electronics HBS: 598022
QUIZ-2 (open book) on Franchising and Retailing
Quick read: Chapters 1, 8 and 9
Read: Chapters 3, 4 and 5
Submit report 7 on John Deere case
HBS: 9577112
Submit report 8 on Virgin-USA:HBS 9-504-028
Discuss: Barco: HBS 591133
Quick-read chapters 7 and 13.
QUIZ-3 (closed book) on Chapters 3 4, and 5
Quick-read chapter 10
Submit report 9 on Federated case HBS: 585104
Submit report 10 on Looks.com case
IVEY: 9B00A012
PROJECT presentation by teams6
Submit the case reports before the beginning of the class-concerned.
From the beginning week till week-7 use the book on Channels. For the rest use the book on pricing.
5
As a team you can take a real-world company project, or an article you could analyze deeply. For example, in
the Toyota article, analyze what compromises Toyota makes in order to move from SCM to DCM. Use theories
to build a model that quantifies the cost involved in doing so, and develop a framework to measure the
advantages of using DCM instead of SCM. Is there any optimum point?
6
Each team will be given 20 minutes each. No written report is needed but a copy of the power-point
presentation is to be sent to me the day before. Spend 2 minutes on the back-ground, move on quickly to
answering the questions.
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BMA5511 Channel Management & Pricing
Semester I, 2009/2010, Prof Trichy Krishnan
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