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V Most of the producers do not sell their goods directly to the final

user, between them stands a set of intermediaries performing a


variety of functions. These intermediaries constitute a marketing
channel.
V A marketing channel system is the particular set of marketing
channels a firm employs and decisions about it are among the most
critical ones management faces.
V A push strategy uses the V In pull strategy the
manufacturer¶s sales force, manufacturers uses
trade promotion money, or advertising and other forms of
other means to induce communication to persuade
intermediaries to carry, customers to demand the
promote and sell the product product from the
to end users. intermediaries.
V ush strategy is appropriate
where there is low brand
loyalty.
V A system of relationships existing among businesses that participate
in the process of buying and selling products and services. The
ultimate goal is to serve the end customer.

V Factors which impact the selection of a marketing channel include:


{ Market factors
{ roduct factors
{ Organizational factors
{ Competitive factors

V îybrid Channel systems develop when organizations begin to use


a number of channels to sell their products.
V A marketing channel performs the work of moving goods from
producers to consumers.

V 2 manufacturer selling a product requires three channels


{ ales Channel
{ Delivery Channel
{ ervice Channel.
{ athering information about potential and current customers, competitors and
other actors and forces in the marketing environment.
{ Develop and disseminate persuasive communications to stimulate purchasing.
{ lace orders with manufactures
{ Acquire the funds to finance inventories at different levels in the marketing
channel.
{ Assume risks connected with carrying out channel work.
{ rovide for the successive storage and movement of physical products.
{ rovide for buyers payment of their bills through banks and other financial
institutions.
{ Oversee actual transfer of ownership from one organization or person to
another.
d 2nalyzing Customers Desired Service output levels
{ xot ize ± The number of units the channel permits a typical customer
to purchase on one occasion.
{ Waiting and Delivery Time
{ patial Convenience ± Bata has made it easier for customers to access
them through a substantial expansion of their distribution outlets.
{ roduct Variety
{ ervice Backup ± The add on services provided to consumers.

ë stablishing Objectives and Constraints


J dentifying and valuating Major Channel 2lternatives
{ Types of Intermediaries
{ Number of Intermediaries
u Intensive Distribution ± A channel strategy that seeks to make products available
in as many appropriate places as possible.
u elective Distribution ± A channel strategy that limits availability of products to a
few carefully selected outlets in a given market.
u Exclusive Distribution ± An extreme case of selective distribution in which only
one outlet in a market territory is allowed to carry a product or product line.
{ Terms and Responsibilities of Channel Members
u rice olicy
u Conditions of ale
u Distributors territorial Rights
u Mutual ervices and Responsibilities
a. Evaluating the Major Alternatives
u Economic Criteria
u Each channel alternative will produce a different level of sales and costs.
u Firms will try to align customers and channels to maximize demand at the
lowest over all costs.
u Clearly, sellers try to replace high ± cost channels with low cost channels
as long as the value added per sale is sufficient.
u Control and Adaptive Criteria
u Using a sales agency poses a control problem. Agents may concentrate on
the customers who buy the most, not necessarily on those who buy the
manufacturer¶s goods.
u To develop a channel, members make some degree of commitment to
each other for a specific period of time.
V electing Channel Members
V Training and Motivating Channel Members
V Evaluating Channel Members
V Modifying Channel Design and Arrangements
V Vertical Marketing ystem
V Horizontal Marketing ystem
V Integrated Multichannel Marketing ystems
V Ôertical marketing system £VM : lanned channel system
designed to improve distribution efficiency and cost effectiveness
by integrating various functions throughout the distribution chain.
{ ñorward ntegration ± Farmer sells his/her crops at the local market rather
than to a distribution center.
{ ½ackward ntegration ± A bakery business bought a wheat farm in order to
reduce the risk associated with the dependency on flour.
{ 2dministered Ôertical Marketing System ± xeadership is assumed by one
dominant system member. roctor& gamble is able to command high levels
of cooperation from their resellers in connection with displays, shelf space,
promotions and pricing.
{ Corporate Ôertical Marketing System ± Coordination and conflict
management are attained by common ownership. herwin ± Williams not
only makes paint but also owns and operates 3,000 retail outlets.
V Contractual Marketing System: VM that coordinates channel
activities through formal agreements among channel members like:
{ Wholesaler-ponsored Voluntary Chains
{ Retail Cooperatives
{ Franchises

V uhe New Competition in Retailing


{ Many independent retailers that have not joined VM¶s have developed
specialty stores that serve special market segments.
V îorizontal marketing System ± In this system, two or more
unrelated companies put their resources together to exploit an
emerging market situation.
{ Hindustan Unilever ximited entering a strategic tie up with epsi Co
India for bottling and distribution of xipton ready to drink beverages.

V ntegrating Multichannel Marketing Systems


{ Multichannel marketing occurs when a single firm uses two or more
marketing channels to reach one or more customer segments.
{ Disney sells its DVD¶s through five main channels - movie rental stores,
retail stores, online retail stores, Disney¶s own online retail stores,
Disney catalog and other catalog sellers.
V Channel Conflict is generated when one channel member¶s action
prevent another channel from achieving its goal.

V Channel Coordination occurs when channel members are brought


together to advance the goals of the channel.
V îorizontal Conflict
{ Most often, horizontal conflict causes sparks between different types of
marketing intermediaries that handle similar products
{ ometimes results from disagreements among channel members at the
same level.

V Ôertical Conflict
{ Channel members at different levels find many reasons for disputes
{ Example: when retailers develop private brands to compete with
producers¶ brands or when producers establish their own retail outlets or
WWW ites.

V Multichannel conflicts exist when the manufacturer has established


two or more channels that sell to the same market.
V oal Incompatibility
V Unclear Roles and Rights
V Differences in erception
V Intermediaries Dependence on Manufacturer
V  ± ½usiness describes the use of electronic means and platforms to
conduct a company¶s business.
V  ± Commerce means that the company or site offers to transact or
facilitate the selling of products and services online
V  ± Purchasing means companies decide to purchase goods, services
and information from various online suppliers.
V  ± Marketing describes company efforts to inform buyers,
communicate, promote and sell its products and services over the
internet.
V Pure ± Click Companies are those that have launched a website
without any previous existence as a firm. Eg; earch Engines.
V ½rick ± and ± Click Companies are existing companies that have
added on online site for information or E ± Commerce.
V Mobile Commerce, also known as M-Commerce is the ability to
conduct commerce using a mobile device, such as a mobile phone, a
ersonal Digital Assistant £DA , a martphone, or other emerging
mobile equipment such as Dashtop Mobile Devices.

V Mobile Commerce has been defined as follows:"Mobile Commerce


is any transaction, involving the transfer of ownership or rights to
use goods and services, which is initiated and/or completed by
using mobile access to computer-mediated networks with the help
of an electronic device.´

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