Electronic Marketing Channels

Objective 1:
Technology
Computers
Internet
15
Impact on
Design & Management of Marketing Channels

Objectives 2 & 3:
Not physical availability
Web-TV, PDAs
The use of the Internet to make products & services
available so that the target market with access to computers or other enabling technologies can shop
& complete the transaction for purchase via interactive electronic means
15
Actually purchasing products through the use of PCs, Web-TV, PDAs

Three
Key
Phenomena
Structure of Electronic
Marketing Channels
1. Disintermediation versus reintermediation
2. Information flow versus product flow
3. Virtual channel structure versus physical channel structure
15

Objective 4:
Disintermediation Reintermediation
Shifting, changing, or adding middlemen to the channel
Intermediaries become superfluous because producers gain exposure to vast numbers of customers in cyberspace
Dell
Computer Corp.
Amazon.com
Auto-By-Tel Corp.
Peapod, Inc.
15

15
Disintermediation versus
Reintermediation
N o matter how technologically sophisticated the
Internet becomes or how much it is hyped, the laws of economics as they relate to channel structure do not change.
=
Efficiency in the performance of distribution tasks is what ultimately determines what form channel structure will take.
The Internet has not eliminated middlemen, or caused total disintermediation.

Objective 5:
Internet Limits
Product Flow
• Cannot be digitized
• Processed slowly, often by people
• Is basis for all other flows—negotiation, ownership, information, & promotion
15

Objective 6:
Developments & Trends
Electronic
Marketing
Channels
• Online shopping to $36 billion from mid-1990s to the end of 2002
• Online shopping has become a routine shopping choice
• PCs, peripherals, software, & books accounted for a significant portion of total retail spending on these products
15

Profile of Online Shoppers
Highest
Percentages
• Age range of 25 to 54
• Income level range $35,000 to about $99,999
• College graduates & those with postgraduate education make up 54%
• Professional/managerial occupations make up 32%
15

Future of Online Shopping
Online Sales as a Percentage of Total Retail Sales,
1999 –2002
1999
Year Online as % of
Retail Sales
0.700
% Change from
Previous Year
15
2000
2001
2002
0.925
1.125
1.300
32.1
21.6
19.7

Objective 7:
Advantages & Disadvantages
15
Advantages of
Electronic
Marketing Channels
1. Global scope & reach
2. Convenience/rapid transaction processing
3. Information processing efficiency & flexibility
4. Data-based management & relationship capabilities
5. Lower sales & distribution costs

Advantages & Disadvantages
Disadvantages of
Electronic
Marketing Channels
1. Lack of contact with actual products & delayed possession
2. Fulfillment logistics not at Internet speed or efficiency
3. Clutter, confusion, & cumbersomeness of Internet
4. Nonpurchase motives for shopping not addressed
5. Security concerns of customers
15

Objective 8:
Implications
• Objectives & strategies of the firm & electronic marketing channels
• Role of electronic marketing channels in the marketing mix
• Channel design & electronic marketing channels
• Channel member selection & electronic marketing channels
• Channel management & electronic marketing channels
• Evaluation & electronic marketing channels
15

Objectives & Strategies of the Firm
15
Role of distribution more complex because of electronic marketing channels
=
Channel manager must consider whether
Internet-based channels fundamentally affect the firm’s decision about the priority given to distribution

The Marketing Mix
The Internet arms large numbers of customers with more information about products & services to level the playing field
15
The fourth P, place (distribution), may assume a larger role relative to the other three variables for more & more firms

Channel Design
The channel manager of retailers, industrial, and B 2 B markets should provide “channel-surfing” consumers with whatever channels or combinations of channels they desire
=
A facet of the development of an effective multichannel marketing strategy
15

Channel Member Selection
Complexity grows as channel member selection may include the need to avoid conflict with conventional channel members
=
The need to select members carefully
15

Channel Management
Multichannel challenge of conventional and electronic channels
=
The fundamental issues of motivating channel members, building cooperation, managing conflict, & coordinating elements of the marketing mix requires manager’s full attention
15

Likely to change
Evaluation
Unlikely to change
15
Specific criteria for Performance expectations, performing evaluations & criteria, & measurement of technological means for how well they are being met doing so by channel members