MARKETING CHANNEL

A set of independent organisations involved in the process of making a product or service available for use or consumption by the consumer or business user.

FUNCTION OF MARKETING CHANNEL

Carrying of inventory Demand generation Physical Distribution After sale service Extending credit to customer

MARKETING

CHANNEL STRATEGY GROWING IN IMPORTANCE. WHY???

Search for sustainable competitive advantage. Growing power of retailers in marketing channel. Need to decrease the cost of distribution. Increased role and power of Technology. New stress on growth.

CHANNEL FUNCTIONS & FLOW

Physical Flow Title Flow Payment Flow Promotion Flow Information Flow

CHANNEL LEVELS

CHANNEL INTEGRATION SYSTEM

CHANNEL CONFLICT

Channel conflict is generated when channel members actions prevent another channel from achieving its goals.

TYPES OF CHANNEL CONFLICT

Vertical

Channel Conflict. Horizontal Channel Conflict. Multi Channel Conflict.

VERTICAL CHANNEL CONFLICT

Conflict between different levels with in the same channel. e.g.- HUL came into conflict with its distributers in Kerala on the issue of commission.

HORIZONTAL CHANNEL CONFLICT

Conflict between members at the same level with in the channel. e.g.- Conflict between two same retail outlets.

MULTI-CHANNEL CONFLICT

Conflict exists when the manufacturer has established two or more channels that sale same product. e.g.- Reebok has its own store and other licensed store who also sale Reebok products.

CAUSES OF CHANNEL CONFLICT

Goal incompatibility. Role ambiguity. Differences in perception. Intermediaries' dependence on the manufacture.

STRATEGIES TO MANAGE CHANNEL CONFLICT

Adoption of super ordinate goals. Exchange of employees. Joint membership in trade association. Co-optation. Diplomacy, mediation, or arbitration. Legal recourse.

DISTRIBUTION CHANNEL

The process or channel or flow which makes the product or service available for use by the customer can be regarded as a distribution channel.

DISTRIBUTION FUNCTION

To meet the satisfaction level of the consumer by delivery of products to different types of customers when and where they required at a reasonable cost can be considered as one of the major function of distribution.

TYPICAL CHANNELS OF DISTRIBUTION

DISTRIBUTION FUNCTIONS
Bridge the gap between production and consumption. Responsible for promoting, awareness regarding the produce. Creating contacts and maintaining liaison with existing one. Understanding customer need and adjusting the offer accordingly. Price negotiation as per the customer demand of the product.

WHY INTERMEDIARIES?

Contacts Experience Socialisation Scale of operation Purpose Match supply from producers to demand from consumers.

STEPS IN DISTRIBUTION PLANNING

Develop Distribution Objective

Evaluate Internal and External Environmental influences

Choose a Distribution Strategy Conventional, Vertical, or Horizontal system Intensive, exclusive or selective distribution No. Of channel levels

Develop Distribution Tactics Selecting channel members Managing the channel Physical distribution planning Order processing Warehousing Transportation Inventory Control

CHOOSING A DISTRIBUTION SYSTEM

Intensive Distribution

Exclusive Distribution

Distribution Intensity

Selective Distribution

MARKETING INTERMEDIARIES

MIDDLEMAN independent link between producers and consumers MERCHANT MIDDLEMAN actually buys goods and takes title/ownership AGENT business unit that negotiates purchases and sales but does not take ownership WHOLESALER a merchant who primarily stores and handles goods in large quantities RETAILER merchant middleman who sells to final consumers BROKER middleman who serves as a go-between for the buyer and seller MANUFACTURERS AGENT an agent who operates by contract serving a geographic territory DISTRIBUTOR wholesale middleman in lines with selective or exclusive distribution JOBBER a middleman who buys from manufacturers and sells to retailers FACILITATING AGENT a firm that performs distribution tasks other than buying, selling and transferring

CHANNEL EFFICIENCY: HOW INTERMEDIARIES REDUCE THE NUMBER OF CHANNEL TRANSACTIONS

CHANNELS OF DISTRIBUTION OF CONSUMER GOODS

TYPES OF DISTRIBUTION STRATEGIES

1. 2. 3.

Exclusive distribution Selective distribution Intensive distribution

1. EXCLUSIVE DISTRIBUTION
SITUATION WHERE SUPPLIERS AND DISTRIBUTORS ENTER
INTO AN EXCLUSIVE AGREEMENT THAT ONLY ALLOWS THE NAMED DISTRIBUTOR TO SELL A

SPECIFIC PRODUCT.

Limiting the use of intermediaries Not allowing competing brands Maintain control

**MARUTI

Exclusive dealers Huge investments by dealers

2. SELECTIVE DISTRIBUTION
TYPE OF PRODUCT DISTRIBUTION THAT LIES BETWEEN INTENSIVE DISTRIBUTION AND EXCLUSIVE DISTRIBUTION, AND IN WHICH
ONLY A FEW RETAIL OUTLETS COVER A SPECIFIC GEOGRAPHICAL AREA. CONSIDERED MORE SUITABLE FOR HIGH-END ITEMS SUCH AS 'DESIGNER' OR PRESTIGE GOODS.

Use of more intermediaries compared to exclusive Need more visibility More control Less cost

**SHAHNAZ HUSSAIN HERBAL PRODUCTS

Not available in every Grocery Shop Available at selected outlets Maintain image

3. INTENSIVE DISTRIBUTION
A MARKETING STRATEGY UNDER WHICH A COMPANY SELLS THROUGH AS MANY OUTLETS AS POSSIBLE, SO THAT THE CONSUMERS ENCOUNTER THE PRODUCT VIRTUALLY EVERYWHERE THEY GO: SUPERMARKETS, DRUG STORES, GAS STATIONS, AND THE LIKE.

As many outlets as possible Multiple channels Consumers widespread Problems of control

**LUX SOAPS, LIFEBUOY, COLGATE, SOFT DRINKS

CHANNEL MANAGEMENT

CHANNEL MANAGEMENT
Channel Management involves the strategy, development and alignment of channels, or customer interfaces, across your marketing, sales and service processes. Channels typically include the Internet, call centers, retail stores, phones and text messaging.

FUNCTIONS OF INTERMEDIARIES IN DISTRIBUTION CHANNEL MANAGEMENT?

The functions of intermediaries are : 1. Availability. 2. Information. 3. Communication. 4. Negotiation. 5. Order. 6. Payment collection. 7. Financing. 8. Risk taking. 9. Title transfer.

SUCCESS CHANNEL MANAGEMENT

Outline

Channel Implementation

Selection Criteria

Building Channels

Channel Structure and Membership Issues

Vertical Integration: Owning the Channel 34

Partner Relationship Management

Bargaining for Influence with Channel Members

Managing Channels

Key Account Management in Collaborative Relationship Building

Channel Power: Getting It, Using It, Keeping It

Managing Conflict to Increase Channel Coordination

35

Implementation Making the Plan Work Effectively Performance Measurement

Selection and Termination Policies

36

MANAGEMENT TECHNIQUES
37

Value and Resource Scarcity Value and Market Information

Preparing a Marketing Plan for Channels Factors in Deriving Economic Value

Cooperation

Information: The Core of Transaction Costs

Transaction-Specific Assets
Specific Human Assets
Brand Capital Time Specificity

38

Marketing Channels Creating Customer Value via Channels of Distribution

Components of Customer Value form, place, possession, and time

Marketing Channels: Structure and Functions

Customer Relationship Management Three types of channel relationships exist: Supplier Relationships. Customer Relationships. Lateral Relationships.

Sifting the cycle

Marketing Channels

Demand-Side Factors Facilitation of Search, Adjustment of Assortment Discrepancy, Routinisation of Transactions Reduction in Number of Contacts.

Marketing Channel Membership

What Is The Work Of The Marketing Channel?

39

Channel Design and Implementation

Channel Design: Segmentation

Channel Selection

Channel Access Formats

Channels Type Options: Establish New Channels or Refine Existing Channels?

40

Distributor and Agent Selection Criteria

Recruiting and Screening New Prospects

Business Policies that Bond Your Channel to You

Preparing a Business Policy Statement Channel Candidate Inducements

Recruiting as a Continuous Process.

Screening
Credit Personality Business and Operational Criteria

Final Selection Criteria

Distributor and Agent Selection Criteria

41

Managing Conflict to Increase Channel Coordination

Forms of Channel Conflict

Assessing the Degree and Nature of Channel Conflict

Measuring Conflict

Managing Conflict to Increase Channel Coordination

Styles of Conflict Resolution

Accommodation Repeated Compromise Competition

When Conflict Is Desirable

When Is Conflict Functional?

Collaboration

Major Sources of Conflict

Conflict Resolution Strategies
Co-optation Third-Party Mechanisms Building Relational Norms Competing Goals Differing Perceptions of Reality

Fuelling Conflict

Clashes Over Domains Multiple Channels

42

Information Exchange

Legal Constraints on Marketing Channel Policies

Market Coverage Policies

Pricing Policies
Discounts

Legal Issues
Product Line Policies Promotional Allowances and Services

Product Policies

Exclusive Dealing

43

Channels for Services

Direct Delivery of Value

Delivery of Value via Intermediaries

Channels for Services

Independent Service Channels Innovations in Methods of Distributing Services 44

IBM Marketing channel Management Clips.

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