Kotler Keller 15

Designing and Managing
Integrated

Marketing Channels

Marketing Management, 13
th

ed

15

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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?