15

Designing and Managing

Integrated
Marketing Channels

Marketing Management, 13th ed

 Chapter Questions

• What is a marketing channel system and

value network?
• What work do marketing channels perform?
• How should channels be designed?
• What decisions do companies face in
managing their channels?
• How should companies integrate channels
and manage channel conflict?
• What are the key issues with e-commerce?

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 Philips Emphasizes Value Delivery

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 What is a Marketing Channel?

A marketing channel system is the

particular set of interdependent
organizations involved in the process of
making a product or service available
for use or consumption.

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 Channels and
Marketing Decisions
• A push strategy uses the manufacturer’s
sales force, trade promotion money, and
other means to induce intermediaries to
carry, promote, and sell the product to end
users.
• A pull strategy uses advertising, promotion,
and other forms of communication to
persuade consumers to demand the product
from intermediaries.

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 Aldi Adjusted Its Strategy
for the U.S. Market

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 Buyer Expectations for
Channel Integration

• Ability to order a product

online and pick it up at a
convenient retail location
• Ability to return an online-
ordered product to a
nearby store
• Right to receive discounts
based on total online and
offline purchases

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 Categories of Buyers

Habitual shoppers

High value deal seekers

Variety-loving shoppers

High-involvement shoppers

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 Types of Shoppers

• Service/quality customers
• Price/value customers
• Affinity customers

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 Channel Member Functions

• Gather information
• Develop and disseminate persuasive
communications
• Reach agreements on price and terms
• Acquire funds to finance inventories
• Assume risks
• Provide for storage
• Provide for buyers’ payment of their bills
• Oversee actual transfer of ownership
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 Figure 15.2 Marketing Channel Flows

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 Figure 15.3
Consumer Marketing Channels

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 Figure 15.3
Industrial Marketing Channels

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 Designing a
Marketing Channel System

Analyze customer needs

Establish channel objectives

Identify major channel alternatives

Evaluate major channel alternatives

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 Channel Service Outputs

Lot size

Waiting/delivery time

Spatial convenience

Product variety

Service backup
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 Identifying Channel Alternatives

Types of
intermediaries
Number of
intermediaries
Terms and
responsibilities

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 Number of Intermediaries

Exclusive

Selective

Intensive

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 Terms and Responsibilities
of Channel Members

• Price policy
• Condition of sale
• Distributors’ territorial rights
• Mutual services and responsibilities

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 Figure 15.4 The Value-Adds vs. Costs
of Different Channels

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 Figure 15.5 Break-Even Chart for the
Choice Between a Company Sales Force
and Manufacturer’s Sales Agency

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 Channel-Management Decisions

Selecting channel members

Training channel members

Motivating channel members

Evaluating channel members

Modifying channel members

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 Channel Power

• Coercive
• Reward
• Legitimate
• Expert
• Referent

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 Channel Integration and Systems

 Vertical marketing
systems
• Corporate VMS
• Administered VMS
• Contractual VMS
 Horizontal
marketing systems
 Multichannel
systems

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 What is Channel Conflict?

• Channel conflict occurs when one

member’s actions prevent another
channel from achieving its goal.
• Types of channel conflict
• Vertical
• Horizontal
• Multichannel

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 Causes of Channel Conflict

Goal incompatibility

Unclear roles and rights

Differences in perception

Intermediaries’ dependence
on the manufacturer

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 Table 15.3 Strategies for Managing
Channel Conflict
• Adoption of • Cooptation
superordinate goals • Diplomacy
• Exchange of • Mediation
employees • Arbitration
• Joint membership in • Legal recourse
trade associations

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 Coach Avoids Brand Dilution

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 e-Commerce Marketing Practices

• Pure-click
• Brick-and-click

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 Marketing Debate

 Does it matter where you are sold?

Take a position:
1. Channel images do not really affect
the brand images of the products they
they sell that much.
or
2. Channel images must be consistent with
the brand image.

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 Marketing Discussion

 Think of your favorite retailers.

 How have they integrated their
channel system?
 How would you like their channels to
be integrated?
 Do you use multiple channels from
them? Why?

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