Chapter 15
Electronic Marketing Channels
Electronic Channels
• Any channel that
involves the use of the
Internet as a means of
reaching the customer
– B2C
– B2B
Market Potential for Electronic
Channels
• How many customers are likely to shop
online?
• What are the demographics of customers
who like to shop online?
Profile of Online Shoppers
• Age range of 25 to 54
• Income level range $35,000 to
about $99,999
Highest
Percentages
• College graduates & those with
postgraduate education
make up 54%
• Professional/managerial
occupations make up 32%
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CONSUMER REASONS FOR/AGAINST ONLINE SHOPPING,
Top reasons for not making an online purchase
(among those not doing so), and service output(s)
affected:
Percent of respondents
(multiple responses
possible)
Product returns might be difficult (customer service)
39%
Desired product not available or in stock online
(assortment/variety)
32
Worried about timely delivery of gifts for holidays
(wait/delivery time)
31
Privacy concerns (customer service)
26
Don't want to pay shipping/handling costs (spatial
convenience)
20
Enjoy holiday shopping at malls/stores (general; all
service outputs)
17
Total cost of buying online is higher than at stores (all
service outputs; signifies intensity of demand for online
service outputs is too low to merit price)
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Source: adapted from Catherine Finamore (2000), "The Connected Consumer," E-Retail Intelligence Update,
PricewaterhouseCoopers, January, pp. 5-8.
Advantages & Disadvantages
Advantages of
Electronic
Marketing Channels
1.
2.
3.
4.
5.
Global scope & reach
Convenience/rapid transaction processing
Information processing efficiency & flexibility
Data-based management & relationship capabilities
Lower sales & distribution costs
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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
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Structure of Electronic
Marketing Channels
1. Disintermediation versus
reintermediation
Three
Key
Phenomena
2. Information flow versus
product flow
3. Virtual channel structure versus
physical channel structure
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Disintermediation and
Reintermediation
Disintermediation
Intermediaries become
“unnecessary” because
producers gain exposure to vast
numbers of customers in
cyberspace
Dell
Computer Corp.
Reintermediation
Shifting, changing, or adding
middlemen to the channel
Amazon.com
Auto-By-Tel Corp.
Peapod, Inc.
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Channel Management 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
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Objectives & Strategies of the Firm
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
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The Marketing Mix
The Internet arms large numbers of customers with
more information about products & services
to level the playing field
The fourth P, place (distribution), may assume a
larger role relative to the other three variables for
more & more firms
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Channel Design
The channel manager of retailers, industrial, and B2B
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
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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
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Dual Distribution with
Electronic Channels
• Conflicts may arise
– Domain conflict
• Free riding
– Goal conflict
– Perceptual differences