A: Over the past three decades, the overwhelming emphasis in the Marketing Mix has been on: Product Strategy with Pricing Strategy and Promotional Strategy also being stressed. But.....
Marketing Channel Strategy (Place); the fourth P in the Marketing Mix has been largely neglected But this is changing....
Competitive Advantage Based on Superior Marketing Channel Strategy is More Difficult for Competitors to Copy Because:
Channel
Strategy is Long Term Requires a Channel Structure Depends on Relationships and People Requires Effective Interorganizational Management
Retailers....
Are Growing Larger Enjoy Substantial Channel Power Act as Buying Agents for Customers Rather than Selling Agents for Suppliers Often Operate on Low Price / Low Margin Model Operate in Saturated Markets and Fight for Market Share
Retailers
Act as Buying Agents for Customers Rather than as Selling Agents for Suppliers
Retailers
Power or Dominant Retailers are therefore the Gatekeepers into the Consumer Marketplace
Thus, Effective Channel Strategy for Dealing with Power Retailers is Crucial
Distribution Costs
Distribution Costs Often Account for a Significant Percentage of the Final Price of Products Sometimes Distribution Costs are Higher than the Manufacturing Cost or the Costs of Raw Materials and Component Parts
Technology has the power to greatly enhance the effectiveness and efficiency of Marketing Channels and could potentially change the entire structure of distribution around the world.
Some Examples...
The Internet Wireless Communications B2C and B2B E-Commerce E Cell Phones Global Telecommunications Robotics & Automated Warehousing Computerized Salespeople
Firms that make effective use of these technologies in their channel strategy can gain a substantial competitive advantage
Competition
Bottom Line
Marketing Channel Strategy Has Become Critically Important For Most Businesses
Channel Strategy
The broad principles by which a firm expects to achieve its distribution objectives for satisfying its customers
The Relationship between customer satisfaction and the companys marketing mix can be represented as:
Cs = f (P1, P2, P3, P4)
where: Cs= degree of customer satisfaction P1= product strategy P2= pricing strategy P3= promotional strategy P4= place (channel strategy)
Distribution Channel Strategy should receive especially heavy emphasis if one or more of the following conditions prevails:
Distribution appears to be the most relevant variable for satisfying customers Parity exists among competitors in the other three marketing mix variables High degree of vulnerability exists because of competitors neglect of distribution Distribution channel strategy can foster synergies
Distribution Exclusive Dealing Full-Line Forcing Full Price Differentiation Price Maintenance Refusal to Deal Resale Restrictions Tying Agreements
Do Customers Buy? Where Do Customers Buy? How Do Customers Buy? Who Buys? Who makes the actual purchase? Who uses the product? Who takes part in the buying decision?
QUESTION
Is this just another buzzword for logistics - getting the right product in the right quantity, at the right time and right place?
OR
Is there something more substantive to this term?
ANSWER
There is something more than semantics here:
Supply Chain Management takes a broader perspective by viewing logistics as an integral part of the marketing channel relationship
Definition:
Continuing and mutually supportive relationship between the manufacturer and its channel members in an effort to provide a more highly motivated team, network, and alliance of channel partners
Traditional us-against-them us-againstmentality is replaced with a new cooperative perception of us in an effective channel partnership or strategic alliance Thus, partnerships or strategic alliances go well beyond the adadhoc, on-again / off-again onoffinteractions typical of traditional relationships among channel members
Relationship Marketing
The practice of building long-term relations longwith key parties - customers, suppliers, distributorsdistributors- in order to retain their longlongterm preference and business Because of the importance of channels of distribution, building good relationships in the marketing channel is key to successful relationship marketing
Find Out the Needs and Problems of Channel Members -informal information system (grapevine) -research studies of channel members -research studies by outside parties -marketing channel audit -distributor advisory councils
Offer Support to Channel Members that is Consistent with Their Needs and Helps Solve their Problems -cooperative arrangements -partnerships and strategic alliances -distribution programming Provide Leadership to Motivate Channel Members -use power effectively -recognize causes of conflict -resolve conflicts
Incongruities Resource Scarcities Perceptual Divergencies Expectational Differences Decision Domain Disagreements Goal Incompatabilities Communication Difficulties
Trends Continued...
6. Continued Growth in Partnerships and Alliances (Relationship Marketing) 7. Increasing Power for Retailers and Wholesalers (Gatekeepers) 8. Mergers and Acquisitions to Gain Distribution Clout 9. Flexible and Focused Distribution to Match Micro, Niche, and Database Marketing 10. Attention to the Behavioral Dimensions of Distribution to Augment Technology