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Absentee Assignment for Channel Management

Prepared By:
Viplav Nigam
16FT-140

Key Learnings

Marketing channels can be described as in the of independent organizations working


towards the making of the products or services for use or consumption

Thus marketing channel system is the collection of all those systems which a firm
employs and prioritize those systems which can greatly affect their efficiency so that their
products or services can reach their end users or consumers. It has to be carefully
designed as in keeping the fact about the current changing needs of consumers, recent
market trends.

Push strategy it uses the manufacturers sales force and trade promotions to promote and
sell the product to end users

Pull strategy-the manufacturers uses advertising, promotion and their forms of


communication to attract or persuade the consumers to buy their products

Omnichannel marketing - is a multichannel approach to sales that seeks to provide the


customer with a seamless shopping experience whether the customer is shopping online
from a desktop or mobile device, by telephone or in a bricks and mortar store.

Channel development

A new firm typically starts as a local operation selling in a limited market, using existing
intermediaries. The number of such intermediaries is apt to be limited: a few
manufacturers sales agents, a few wholesalers, several established retailers, a few
trucking companies, and a few warehouses. Deciding on the best channels might not be a
problem; the problem might be to convince the available intermediaries to handle the
firms line.

If the firm is successful, it might branch into new markets and use different channels in
different markets. In smaller markets, the firm might sell directly to retailers; in larger
markets, it might sell through distributors. In rural areas, it might work with generalgoods merchants; in urban areas, with limited-line merchants. In one part of the country,
it might grant exclusive franchises; in another, it might sell through all outlets willing to
handle the merchandise. In one country it might use international sales agents; in another,

it might partner with a local firm. In short, the channel system evolves in response to
local opportunities and conditions.
Value networks

An even broader view sees a company at the centre of a value networks system of
partnerships and alliances that a firm creates to source, augment, and deliver its offerings.
A value network includes a firms suppliers and its suppliers, and its immediate customers
and their end customers. The value network includes valued relations with others such as
university researchers and government approval agencies.

The role of Marketing Channels

The marketing channel can perform different roles according to their services which can be
forward flow (storage movement), backward flow (ordering and payment ) and it can be both
ways also .

Channel levels
A zero level channel consist of a manufacturer selling directly to the final customer. Major
examples are door to door sale, mail order. A one-level channel contains one selling
intermediary; a two-level channel contains two selling intermediaries. These intermediates could
be retailers, distributors. As the no. of levels increase the level of difficulty of information
sharing and coordination also increase. Channels normally describe a forward movement of
products from source to user.

Service Sector Channels


Marketing channels are not limited to the distribution of physical goods. Producer of service and
ideas also face problem of making their output available and accessible to target population. The
institutions coming under these category must figure out industries and locations for reaching a
far flung population .

Channel-Design Decisions
Analyzing customers desired service output levels
1. Lot size- the number of units a particular channel can produce thus affecting the purchasing
ability of a customer.
2. Waiting and Delivery time- The average time a customer has to wait for receiving its delivery
of goods and services from a particular channel.
3. Spatial convenience- this describes the number of channels available for a particular product.
4. Product variety - The assortment provided by the marketing channel
5. Service backup Add on services provided by the channel
Establishing objectives and constraints
Channel objectives should be stated in terms of targeted service output level. Channel objectives
vary with product characteristics. Bulky product such as building materials requires channels that
minimize the shipping distance and the amount of handling.
Identifying major channel alternatives
Companies can choose from a wide variety of channels for reaching customers from salesforces
to agents, distributors, dealers and direct mail. Channel alternative described by 3elements: the
types of available business intermediaries, the no. of intermediaries needed and the terms and
responsibilities of each channel member.
Types of intermediaries:
A firm needs to identify the types of intermediaries available to carry on in channel work.
No. of intermediaries: 3 stages are available: exclusive distribution, selective distribution and
intensive distribution.
Exclusive distribution means severally limiting a no. of intermediaries.

Selective distribution involves the use of more than a few but less than all of the intermediaries
who are willing to carry a particular of product.
Intensive distribution consists of the manufacturer placing the goods or services in as many
outlets as possible.
Terms and responsibilities of channel members:
Price policy calls for the producer to establish a price list and schedule of discounts and
allowance that intermediaries see as an equitable and sufficient. Condition of sale refers to
payment terms and producer guarantee. Mutual service and responsibilities must be carefully
spelled out, especially in franchise and exclusive agency channels
Channel management decisions
Selecting channel members
Companies need to select their channel members carefully as they represent the company to the
customer. To facilitate channel members selection, produces should determine what
characteristics distinguish the better intermediaries, for e.g. the no. of years in business, the
growth and profit record and financial strength.
Training and motivating channel members
Companies need to plan and implement careful training programs for their intermediaries for this
they exercise power through their own right of channel. The various powers that a manufacturer
can exercise to dominate its position over the the whole channel management system are:
Coercive power Threating to withdraw its resources or terminate the whole relationship
Reward power- an extra benefit given in lieu of performance of specific acts or functions
Legitimate power an obligation under the contract being signed by both parties
Expert power- manufacturer must continue to develop new expertise so intermediaries will
want to continue cooperating

Referent power- the manufacturer is so highly appreciated that they feel proud to be associated
Channel integration and systems
Vertical marketing system
A VMS by contrast, comprises the producer, wholesaler and retailer. Acting as a unified system.
Horizontal marketing systems
In which two or more unrelated companies put together resources on program to exploit an
emerging marketing opportunity. Multichannel marketing systems It occurs when single firm
uses two or more marketing channels to reach one or more customer segments. Planning channel
architecture
Conflict, cooperation, and competition
Types of conflict and competition

Vertical channel conflict means a conflict between different levels within the same
channel.
Horizontal channel conflict involves a conflict between members at the same level within
the channel.
Multi-channel conflict exists when the manufacturer has established two or more channel
that sell to the same market.

Causes of channel conflict


Goal incompatibility
Difference in perception
Dependence
Managing channel conflict
Co-optation is an effort by one organization to win the support of leaders of another organization
by including them in advisory council. Arbitration occurs when the two parties agree to present
their arguments to one or more arbitrators and accept the arbitration decision.

Legal and ethical issues in channel relations


Many producers likes to develop exclusive channels for their products. Exclusive dealing often
include exclusive territory agreement. The producer may agree not to sell to other dealers in a
given area. Producers are free to select their dealers, but their right to terminate dealers is
somewhat restricted.