Marketing Channel Strategy

Marketing 624
Channels of Distribution Management
Marketing Channel Strategy
Dr. Bert Rosenbloom Professor of Marketing and
Rauth Chair in Electronic Marketing
Channel Strategy
The broad principles by which
the firm expects to achieve its
distribution objectives for its
target market(s)
Six Fundamental Strategic
Distribution Decisions
What role should distribution play in the firm’s
overall objectives and strategies?
What role should distribution play in the
marketing mix?
How should the firm’s marketing channels be
designed to achieve its distribution objectives?
Six Fundamental Strategic
Distribution Decisions (Cont’d)
What kinds of channel members should be
selected to meet the firm’s distribution
How can the marketing channel be managed to
implement the firm’s channel design effectively
and efficiently?
How can channel member performance be
Channel Design
Those decisions involving the
development of new marketing
channels where none had existed
before, or the modification of
existing channels
Channel Design and
Differential Advantage
The design of the channel should
contribute to the firm’s quest for
Differential Advantage
Paradigm of the
Channel Design Decision
Recognize need for channel design decision
Set and coordinate distribution objectives
Specify distribution tasks
Develop possible alternative channel structures
Evaluate variables affecting channel structure
Choose the best channel structure
Select the channel members
Channel Design Decision
Phase 1:
Recognize Need for Channel Design
Obvious examples pp. 200-201 in text
But many times the need to make channel
design decisions is not obvious
Channel Design Decision
Phase 2:
Set & Coordinate Distribution Objectives
Become familiar with objectives of firm
Set explicit distribution objectives
Check for congruency
Channel Design Decision
Phase 3:
Specifying Distribution Tasks
Don’t underestimate all of the “nuts
and bolts” necessary to make
products and services conveniently
available to customers
Channel Design Decision
Phase 4:
Develop Alternative Channel Structures
Number of levels
Intensity at various levels
Types of intermediaries
Channel Design Decision
Phase 5:
Evaluate Variables Affecting channel
Market variables
Product variables
Company variables
Intermediary variables
Environmental variables
Behavioral variables
Heuristics play an important role
Channel Design Decision
Phase 6:
Choosing the “Best” Channel Structure
Product-based models (Aspinwall)
Financial Approach
Transaction Cost Analysis Approach
Management Science Approach
Judgmental –Heuristic Approach
Channel Design Decision
Phase 7:
Select the Channel Members
Finding perspective channel members
Applying selection criteria
Securing perspective channel members
Target Markets and Channel
Design Strategy
Work “backwards” from what the
final customers wants. A “bottom
up” approach.
Framework for Market
Market geography
Market size
Market density
Market behavior
when customers buy
where customers buy
how customers buy
who buys
Who Buys?
Who makes physical purchase?
Who uses the product?
Who influences the buying decision?
Channel Management
The administration of existing
channels to secure the cooperation
of channel members in achieving
the firm’s distribution objectives
Motivating Channel
 Find out needs and problems
 Offer support consistent with
channel member needs
 Provide leadership
Learning About Channel
Members Needs and Problems
“Grapevine” (informal communications
Inside research
Outside research
 Marketing channel audit
Distributor advisory councils
Support for Channel
Cooperative approach
Partnership approach
Distribution programming approach
Product Issues in
Channel Management
 New Product Planning and Development
Product Life Cycle
Strategic Product Management
New Product Planning and
Channel member input
Fit with channel member assortments
Education and training
Product Life Cycle
What are the channel management
implications during each stage?
Absolute decline
Strategic Product
 Product differentiation
 Product
 Product line expansion
and contraction
 Trading up and trading
 Brand strategy
 Service strategy
Pricing in Channel
Promotion Through the
Pull versus Push
Promotional Strategy
Classic Push
Promotional Strategies
Cooperative advertising
Promotional allowances
Displays and selling aids
In-store promotions
Contests and incentives
Special promotional deals and merchandise
“Kinder and Gentler” Push
Promotional Strategies
Missionary selling
Trade shows