Marketing Management
1st of June 2011
Marketing Channels
Channel Design Decisions
• Where do we sell our goods and to whom?
• Which intermediaries do we use, and are they going to
agree to handle our goods?
• Do we sell direct or do we use resellers?
• Do we have distributors?
• What other channel systems do we use?
• Marketing channel systems have to continuously evolve
to meet market opportunities and prevalent conditions.
• Marketing Channel Design: designing effective
marketing channels by analysing consumer needs,
setting channel objectives, identifying major channel
alternatives, and evaluating them.
Channel Design Decisions
Analysing Consumer Needs
• Marketing channels are part of the customer-value
delivery network
– All channel members add value for the customer
• Designing a marketing channel starts with knowing what
consumers want from the channel
• What do they want to buy, where from, and how?
• The swifter the delivery, the greater the assortment, and
more add-ons, the greater the channel’s service levels
• Providing higher service levels may result in higher costs
for the channel and higher customer prices
• The company needs to balance consumer needs against
feasibility, costs as well as consumer price preference
Channel Design Decisions
Setting Channel Objectives
• A company needs to identify which segments to serve
and channels to use
• The idea to minimise channel costs of meeting customer
service requirements
• Company Channel Objective Influences:
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Nature of the company
Company Products and Services
Marketing Intermediaries
Competitors
Operating Environment
Channel Design Decisions
Identifying Major Channel Alternatives
• Types of Intermediaries
– Channel members to carry out the work
– Many types of members may pose advantages and drawbacks
• Number of Intermediaries
– Intensive Distribution, Exclusive Distribution and Selective Distribution
– Intensive Distribution: stocking the product in as many outlets as possible
– Exclusive Distribution: limited number of outlets have the right to distribute
the company’s product in the territory
– Selective Distribution: selecting a few intermediaries who are willing to carry
the products
• Responsibilities of Channel Members
– Terms and responsibilities need to be agreed between producer and
intermediaries
– Price policies, terms of sale, territorial rights and services must be agreed
Channel Design Decisions
Evaluating Major Alternatives
• Channel alternatives should be evaluated against
economic, control and adaptive criteria
– Economic Criteria: sales, costs and profitability of channel
alternatives
– Control Issues: who will control intermediaries and product flow
– Adaptive Criteria: channel must be flexible to adapt to
environmental changes
• A channel involving long-term commitments must be
superior on economic and control grounds to be
considered
Channel Design Decisions
Designing International Distribution Channels
• Channel systems vary widely from country to country
• Marketers need to adapt their channel strategies to
structures prevalent in each individual country
• Some countries will have complex distribution systems
with multi-layered intermediaries
• Sometimes you can profitably access small portions of a
population cause of immature distribution channels
• Customs and Government regulations play a crucial role
in how a company distributes products globally
Channel Design Decisions
Channel Management Decisions
Marketing Channel Management: the selection,
management and motivation of individual channel
members and evaluating their performance over a period
Selecting Channel Members
• A company should always evaluate channel member’s
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experience,
lines carried,
growth and profit records,
cooperativeness and
reputation
• Sales Agents: evaluate the number and character of
lines carried and size and quality of sales force
• Retail Stores: store’s customers, locations, and growth
potential
Channel Management Decisions
Managing and Motivating Channel Members
• The company has to continuously motivate channel
members to do their best
• Company has to sell to the intermediaries and with them
– they’re 1st line customers and partners
• Partner relationship management is practised to forge
long-term partnerships with channel members
• This ensures that we meet the needs of both the
company and its marketing partners
• PRM and SCM software is now being used to plan and
manage relationships with channel partners
Channel Management Decisions
Evaluating Channel Members
• Producers must regularly check channel member
performance
• Standards such as:
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Sales quotas
Average inventory levels
Customer delivery time
Damaged and lost goods
Promotion and Training involvement
Customer services
• Intermediaries which perform well and add great value should
be rewarded
• Poor performing intermediaries should be assisted or
replaced
• Producers must be sensitive how they treat dealers
Marketing Logistics and SCM
Marketing Logistics and SCM
Marketing Logistics and SCM
Nature and Importance
• Marketing Logistics: planning, implementing and controlling the
physical flow of materials, final goods and related information
from origin to consumption to meet customer requirements at a
profit
• This means getting the right product to the right customer in the
right place at the right time
• Marketing logistics involves outbound, inbound and reverse
distribution
– Outbound Distribution: from factory to resellers to consumers
– Inbound Distribution: from suppliers back to the factory
– Reverse Distribution: moving unwanted, returned or excess products
• Supply Chain Management: managing upstream and
downstream value-added flows of materials, final goods, and
related information amongst suppliers, resellers, the company
and consumers
Marketing Logistics and SCM
Nature and Importance
• There’s a greater emphasis on logistics for
the following reasons:
– Powerful competitive advantage: better
service at lower prices
– Cost savings to company and customers
– Greater and increased product variety
– Technology improvements making it easier
– Environmental sustainability efforts: green
supply chain to be responsible and profitable
Marketing Logistics and SCM
Goals of the Logistics System
• Difficult to offer efficient distribution, maximum customer
services at a lower cost
• Goal should be to provide a targeted level of service at
the least cost
• Research into various distribution services is important
before service levels are set
• Objective is to maximise profits and not sales
• Can offer less services at a reduced price
• Alternatively, offer higher prices for more services to
cover higher costs
Marketing Logistics and SCM
See you next time.
Cheers Guys!