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Designing and Managing
Integrated

Marketing Channels

Marketing Management, 13
th

ed

15

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?

Copyright © 2009 Pearson Education, Inc.

Publishing as Prentice Hall



15
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3

Philips Emphasizes Value Delivery

Copyright © 2009 Pearson Education, Inc.

Publishing as Prentice Hall



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4

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.

Copyright © 2009 Pearson Education, Inc.

Publishing as Prentice Hall



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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.

Copyright © 2009 Pearson Education, Inc.

Publishing as Prentice Hall



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6

Aldi Adjusted Its Strategy


for the U.S. Market

Copyright © 2009 Pearson Education, Inc.

Publishing as Prentice Hall



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7

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

Copyright © 2009 Pearson Education, Inc.

Publishing as Prentice Hall



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8

Categories of Buyers

Habitual shoppers

High value deal seekers

Variety
-
loving shoppers

High
-
involvement shoppers

Copyright © 2009 Pearson Education, Inc.

Publishing as Prentice Hall



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9

Types of Shoppers


Service/quality customers


Price/value customers


Affinity customers

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Publishing as Prentice Hall



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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

Copyright © 2009 Pearson Education, Inc.

Publishing as Prentice Hall



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Figure 15.2 Marketing Channel Flows

Copyright © 2009 Pearson Education, Inc.

Publishing as Prentice Hall



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12

Figure 15.3

Consumer Marketing Channels

Copyright © 2009 Pearson Education, Inc.

Publishing as Prentice Hall



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13

Figure 15.3

Industrial Marketing Channels

Copyright © 2009 Pearson Education, Inc.

Publishing as Prentice Hall



15
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14

Designing a

Marketing Channel System

Analyze customer needs

Evaluate major channel alternatives

Identify major channel alternatives

Establish channel objectives

Copyright © 2009 Pearson Education, Inc.

Publishing as Prentice Hall



15
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15

Channel Service Outputs

Lot size

Waiting/delivery time

Spatial convenience

Product variety

Service backup

Copyright © 2009 Pearson Education, Inc.

Publishing as Prentice Hall



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16

Identifying Channel Alternatives

Types of

intermediaries

Number of

intermediaries

Terms and

responsibilities

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Number of Intermediaries

Exclusive

Selective

Intensive

Copyright © 2009 Pearson Education, Inc.

Publishing as Prentice Hall



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Terms and Responsibilities

of Channel Members


Price policy


Condition of sale


Distributors’ territorial rights


Mutual services and responsibilities

Copyright © 2009 Pearson Education, Inc.

Publishing as Prentice Hall



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

Copyright © 2009 Pearson Education, Inc.

Publishing as Prentice Hall



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20

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

Copyright © 2009 Pearson Education, Inc.

Publishing as Prentice Hall



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Channel
-
Management Decisions

Selecting channel members

Training channel members

Motivating channel members

Evaluating channel members

Modifying channel members

Copyright © 2009 Pearson Education, Inc.

Publishing as Prentice Hall



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Channel Power


Coercive


Reward


Legitimate


Expert


Referent

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Publishing as Prentice Hall



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Channel Integration and Systems


Vertical marketing
systems


Corporate VMS


Administered VMS


Contractual VMS


Horizontal
marketing systems


Multichannel
systems


Copyright © 2009 Pearson Education, Inc.

Publishing as Prentice Hall



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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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Publishing as Prentice Hall



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Causes of Channel Conflict

Goal incompatibility

Unclear roles and rights

Differences in perception

Intermediaries’ dependence

on the manufacturer

Copyright © 2009 Pearson Education, Inc.

Publishing as Prentice Hall



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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


Copyright © 2009 Pearson Education, Inc.

Publishing as Prentice Hall



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Coach Avoids Brand Dilution

Copyright © 2009 Pearson Education, Inc.

Publishing as Prentice Hall



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e
-
Commerce Marketing Practices



Pure
-
click


Brick
-
and
-
click

Copyright © 2009 Pearson Education, Inc.

Publishing as Prentice Hall



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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.

Copyright © 2009 Pearson Education, Inc.

Publishing as Prentice Hall



15
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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?