Mm unit 4point1
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This document discusses marketing channels and channel management. It defines marketing channels as sets of interdependent organizations that make a product available for use. Channels perform important functions like information gathering, stimulating purchases, negotiating prices, ordering, financing inventory, storage, and payment. Channel design considers customer expectations, objectives, constraints, alternatives that are evaluated. Channel management includes selecting, training, motivating, and evaluating channel members. Channels are dynamic and can involve vertical, horizontal, and multi-channel systems. Conflicts between channels must be managed to balance cooperation and competition.
Mm unit 4point1
- 1. Channels of Marketing Course: MBA Subject: MM II Unit: 4
- 2. Designing and Managing Integrated Marketing Channels Sets of interdependent organizations involved in the process of making a product or service available for use or consumption. They perform important functions viz., info gathering, stimulating purchasing through communications, agreeing on prices etc, ordering manufacturers, financing inventories at various levels, lot of risk assumption, storing and movement of products, complete payment formalities for buyers and transferring ownerships.
- 3. Designing and Managing Integrated Marketing Channels … • There can be channels of various levels viz., zero, single, double, triple etc. A lot depends upon the organization and the nature of the business. • Service sector will not have many channels linking the company with the end user, but due to spread of activity, a franchise network does happen at times. A hotel will have different channel than a mobile service provider.
- 4. Designing and Managing Integrated Marketing Channels … • Channel design decisions and considerations Customer expectations viz., lot size, waiting time, spatial convenience, product variety and service backup. Establishing objectives and constraints. This requires keeping in mind strengths and weaknesses of different types of channel members or intermediaries Economic conditions also determine the number and expanse of channel links
- 5. Designing and Managing Integrated Marketing Channels … • Channel design decisions and considerations… Channel alternatives identification. This goes into elements like types of available business intermediaries, numbers of intermediaries needed, and the terms and responsibilities of each channel member. Evaluating the various alternatives. Each channel alternative needs to be evaluated against economic, control and adaptive criteria.
- 6. Designing and Managing Integrated Marketing Channels … • Channel Management Decisions After channel alternatives are identified, individual members or parties are to be selected, trained, motivated and evaluated on a continuous basis. Selection can be done on the basis of no of years in business, other lines carried, financial performance and qualitative assessments. Training of channel members involves regularly updating them of products and services rigorously and certifying it also from time to time.
- 7. Designing and Managing Integrated Marketing Channels … • Channel Management Decisions…. Motivating Channel members requires actions beyond training. It requires understanding their needs and wants and meeting them regularly. Besides that exercising power in various forms also plays a significant role. These forms of power may be coercive, reward, legitimate, expert and referent power. One or more forms of power may be used in conjunction. Evaluating Channel members against standards like sales- quota attainment, average inventory levels, customer delivery time, treatment of damaged and lost goods and cooperation in promotional and training programs.
- 8. Designing and Managing Integrated Marketing Channels … • Channel Management Decisions…. Modifying Channel arrangements implies changing or re- orienting existing channel/s and their arrangements. This normally happens when as a result of evaluation it as found that channel is not working as planned ,consumers are changing, market expansion is not as anticipated, competition emerges, innovations demand change or PLC stage of the product/s changes
- 9. Designing and Managing Integrated Marketing Channels … • Channel dynamics Channels will not remain static and will continue to move in various directions. Wholesaling and retailing are undergoing rapid developments and this is constantly giving dynamism to channel management. All this has generated vertical, horizontal and multi-channel marketing systems. A conventional marketing channel consists of producer, wholesaler(s) and retailer(s).
- 10. Designing and Managing Integrated Marketing Channels … • Channel dynamics…. A Vertical marketing System (VMS) consists of producer, wholesaler(s) and retailer)s) in unity wherein one of the member virtually owns all others.This channel member can be the producer or any wholesaler or even a retailer. Retailing in its new format has posed serious challenge to VMS and company’s have taken it as a challenge.
- 11. Designing and Managing Integrated Marketing Channels … • Channel dynamics…. Horizontal marketing System (HMS) where two or more unrelated companies come together and exploit an existing marketing opportunity. A bank and an educational institution coming together for educational loans or automobile company and bank coming together for car loans etc. Multi-Channel Marketing System (MMS) where an organization uses two or more marketing channels to reach same or different customer segments.
- 12. Designing and Managing Integrated Marketing Channels … • Conflict, Cooperation and Competition Conflict can be vertical, horizontal as well as multi-channel. Vertical conflict implies clash between the different levels whereas horizontal conflict implies clash at the same levels. Multi-channel conflict happens when the company has established two or more channels that sell to the same market. Causes of such conflicts are either goal incompatibility or unclear roles and rights or both. It is not always possible to resolve all conflicts.
- 13. Designing and Managing Integrated Marketing Channels … • Conflict, Cooperation and Competition… Managing Channel conflict It is not easy to resolve every conflict and conflict may be constructive also at times which helps in adapting to changing environments. But every time it may not be useful. Companies therefore not always eliminate conflict but at times manage them to their advantage also if the situation favors such an action.
- 14. Designing and Managing Integrated Marketing Channels … • Legal and Ethical issues in Channel Relations Exclusive dealing Exclusive territories Tying Agreements Dealers rights
- 15. Sources:- • Koshy and Kotler, Marketing Management.