The document discusses marketing channels and channel management. It defines a marketing channel as the set of organizations involved in making a product available to consumers. It also discusses channel design, integrating channels, and managing channel conflict. Key topics covered include push and pull strategies, channel member functions, designing channel systems, and dealing with issues in multi-channel marketing like brand dilution.

1. Designing and Managing
Integrated
Marketing Channels
Marketing Management, 13th ed
15

2. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 15-2
Chapter Questions
• What is a marketing channel system and
value network?
• What work do marketing channels perform?
• How should channels be designed?
• What decisions do companies face in
managing their channels?
• How should companies integrate channels
and manage channel conflict?
• What are the key issues with e-commerce?

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Philips Emphasizes Value Delivery

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What is a Marketing Channel?
A marketing channel system is the
particular set of interdependent
organizations involved in the process of
making a product or service available
for use or consumption.

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Channels and
Marketing Decisions
• A push strategy uses the manufacturer’s
sales force, trade promotion money, and
other means to induce intermediaries to
carry, promote, and sell the product to end
users.
• A pull strategy uses advertising, promotion,
and other forms of communication to
persuade consumers to demand the product
from intermediaries.

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Aldi Adjusted Its Strategy
for the U.S. Market

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Buyer Expectations for
Channel Integration
• Ability to order a product
online and pick it up at a
convenient retail location
• Ability to return an online-
ordered product to a
nearby store
• Right to receive discounts
based on total online and
offline purchases

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Categories of Buyers
Habitual shoppers
High value deal seekers
Variety-loving shoppers
High-involvement shoppers

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Types of Shoppers
• Service/quality customers
• Price/value customers
• Affinity customers

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Channel Member Functions
• Gather information
• Develop and disseminate persuasive
communications
• Reach agreements on price and terms
• Acquire funds to finance inventories
• Assume risks
• Provide for storage
• Provide for buyers’ payment of their bills
• Oversee actual transfer of ownership

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Figure 15.2 Marketing Channel Flows

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Figure 15.3
Consumer Marketing Channels

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Figure 15.3
Industrial Marketing Channels

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Designing a
Marketing Channel System
Analyze customer needs
Evaluate major channel alternatives
Identify major channel alternatives
Establish channel objectives

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Channel Service Outputs
Lot size
Waiting/delivery time
Spatial convenience
Product variety
Service backup

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Identifying Channel Alternatives
Types of
intermediaries
Number of
intermediaries
Terms and
responsibilities

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Number of Intermediaries
Exclusive
Selective
Intensive

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Terms and Responsibilities
of Channel Members
• Price policy
• Condition of sale
• Distributors’ territorial rights
• Mutual services and responsibilities

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Figure 15.4 The Value-Adds vs. Costs
of Different Channels

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Figure 15.5 Break-Even Chart for the
Choice Between a Company Sales Force
and Manufacturer’s Sales Agency

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Channel-Management Decisions
Selecting channel members
Training channel members
Motivating channel members
Evaluating channel members
Modifying channel members

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Channel Power
• Coercive
• Reward
• Legitimate
• Expert
• Referent

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Channel Integration and Systems
Vertical marketing
systems
• Corporate VMS
• Administered VMS
• Contractual VMS
Horizontal
marketing systems
Multichannel
systems

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What is Channel Conflict?
• Channel conflict occurs when one
member’s actions prevent another
channel from achieving its goal.
• Types of channel conflict
• Vertical
• Horizontal
• Multichannel

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Causes of Channel Conflict
Goal incompatibility
Unclear roles and rights
Differences in perception
Intermediaries’ dependence
on the manufacturer

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Table 15.3 Strategies for Managing
Channel Conflict
• Adoption of
superordinate goals
• Exchange of
employees
• Joint membership in
trade associations
• Cooptation
• Diplomacy
• Mediation
• Arbitration
• Legal recourse

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Coach Avoids Brand Dilution

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e-Commerce Marketing Practices
• Pure-click
• Brick-and-click

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Marketing Debate
 Does it matter where you are sold?
Take a position:
1. Channel images do not really affect
the brand images of the products they
they sell that much.
or
2. Channel images must be consistent with
the brand image.

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Marketing Discussion
 Think of your favorite retailers.
 How have they integrated their
channel system?
 How would you like their channels to
be integrated?
 Do you use multiple channels from
them? Why?