Learning Objectives
After studying this chapter, you should be able to:
1. Explain how companies use marketing channels and
discuss the functions these channels perform
2. Discuss how channel members interact and how
they organize to perform the work of the channel
3. Identify the major channel alternatives open to a
company
4. Discuss the nature of retail competition
of purchase-production-consumption activities
value delivery network
is the firms suppliers, distributors, and ultimately, customers
who partner with each other to improve the performance of
the entire system.
Cont..
Intermediaries
offer the firm more than it can achieve on its own
through their contacts, experience, specialization,
and scale of operations.
How Channel
Information:
Negotiation:
Members
Gathering and Add Value
Reaching an
distributing marketing
research and intelligence
Promotion:
Development and
spreading persuasive
communications about
an offer
Contact:
Finding and
communicating with
prospective buyers
Matching:
Cont..
agreement on price
and other terms of the
offer so that ownership
or possession can be
transferred
Physical distribution:
Transporting and
storing goods
Financing:
Risk taking:
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Channel Functions
These functions should be assigned to
the channel member who can add the
most value for the cost
Information
Information
Negotiation
Negotiation
Promotion
Promotion
Physical
Physical Distn
Distn
Contact
Contact
Financing
Financing
Matching
Matching
Risk
Risk Taking
Taking
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Channel Behavior
The channel will be most effective when:
each member is assigned tasks it can do best.
all members cooperate to attain overall channel
goals.
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2. Setting Channel
Objectives in terms of:
Targeted levels of customer
service
What segments to serve
Best channels to sue
Minimizing the cost of
meeting customer service
requirements
Objectives are influenced by
Nature of the company
Marketing intermediaries
Competitors
Environment
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Cont..
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Cont..
Intensive distribution
a strategy used by producers of convenience
products and common raw materials
they stock their products in as many outlets as possible.
Exclusive distribution
a strategy in which the producer gives only a
limited number of dealers the exclusive right to
distribute products in territories,
e.g. Luxury automobiles and High-end apparel
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Selective distribution
Cont..
Price policies
Conditions of sale
Territorial rights
Services provided by each party
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and
retailer
in
Retail Strategy
An overall plan for guiding a retail firm
Influences the firms business activities
Influences firms response to market
forces
Six Steps in Strategic Planning
1.
2.
3.
4.
5.
6.
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sectors
Retail competition is multidimensional i.e., 5
levels
1st level product, services,
level
dimensions
deals
with
including
geographical
location
and
shopping environment.
5th level nature of the marketplaces
(local, national international) economy,
including economic boom, bust, recession,
inflation prone, hyper inflation etc..
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Competitive Strategies
Strategies that strongly position the
company against competitor and
give the company strongest possible
strategic advantage.
Competitive Strategies helps in:
1. Building
profitable
customer
relationships
2. Gaining competitive advantage
3. Analyzing their competitors
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Continued.
surgical
sutures
or
NeuFlex
Basic competitive
strategies
Over cost leadership
Companies try to achieve the lowest
production and distribution cost.
Low costs let its price lower than its
competitors and win a large market
share.
Example: Big bazaar
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Differentiation
Cont..
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Focus
Cont..
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Second value
While companies that excel at operational excellence
disciplines
Customer
run their businesses as lean,
mean machines and
Intimacy
those pursuing a strategy of customer intimacy
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Conclusion
Classifying competitive strategies as value
disciplines defines marketing strategy in
terms of single minded pursuit of
delivering superior value to customers.
Each value discipline defines a specific way
to build lasting customer relationship.
It helps the firms to analyze their
competitors and design effective
competitive marketing strategies to gain
competitive advantage.
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