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DESIGNING & MANAGING

INTEGRATED MARKETING CHANNELS


CHAPTER OUTLINE
01 What is a marketing channel system and value network?

02 What work do marketing channels perform?

03 How should channels be designed?

04 What decisions do companies face in managing their channels?

05 How should companies integrate channels and manage conflict?

06 What are the key issues with e-commerce and m-commerce?


Marketing Channels
& Value Networks
MARKETING
CHANNELS
sets of interdependent organizations
participating in the process of
making a product or service
available for use or consumption
Channels & Marketing Decisions

PUSH STRATEGY
Induce intermediaries to carry, promote, and
sell the product to end users

PULL STRATEGY
Persuade consumers to demand the product
from the intermediaries
Multichannel Marketing
Two or more marketing channels are used to reach customer

TELEVISION PRINT MEDIA

You can simply impress your audience and


add a unique zing and appeal to your
Presentations.

SOCIAL MEDIA

PHONE COMMUNICATION

You can simply impress your audience and


add a unique zing and appeal to your
Presentations.
VALUE
NETWORK
a system of partnerships and
alliances that a firm creates to
source, augment, and deliver its
offerings
Channel Member Functions
 Gather information
 Develop and disseminate persuasive
communications
 Reach agreements on price and term
 Acquire funds to finance inventories
 Assume risks
 Provide for storage
 Provide for buyers’ payment/bills
 Oversee actual transfer of ownership
MARKETING CHANNEL FLOWS
PHYSICAL FLOW

TITLE FLOW

PAYMENT FLOW

INFORMATION FLOW

PROMOTION FLOW
Marketing Channels
CHANNEL LEVELS

INDUSTRIAL MARKETING CHANNEL

CONSUMER MARKETING CHANNEL


CHANNEL-DESIGN DECISIONS

ANALYZE ESTABLISH IDENTIFY EVALUATE

 Service/Quality  Service output levels  Types  Economic


 Price/Value  Costs  Number  Control
 Affinity  Support levels  Terms & Responsibilities  Adaptive

Types of Shoppers Outputs & Costs Channel Alternatives Set Criteria


CHANNEL MANAGEMENT DECISIONS

SELECTING Determine what characteristics distinguish the


CHANNEL MEMBERS better intermediaries

TRAINING & MOTIVATING Determine needs, wants & channel offerings.


CHANNEL MEMBERS Channel Power & Channel Partnerships

EVALUATING
CHANNEL MEMBERS Performance vs. Standards

MODIFYING CHANNEL Add or Drop / Channel Modification Decisions


DESIGN & ARRANGEMENTS Channel Evolution & Global Channel Considerations
CHANNEL
INTEGRATION &
SYSTEMS
Vertical Marketing Systems Includes the producer,
wholesaler(s) and retailer(s)
acting as a unified system

3 Types of VMS

1. Corporate VMS
2. Administered VMS
3. Contractual VMS
Types of VMS
1. Corporate VMS

Combines successive stages of production and distribution


under single ownership.

2. Administered VMS

Coordinates successive stages of production and


distribution through the size and power of one of the
members
Types of VMS
3. Contractual VMS
Consists of independent firms at different levels
of production and distribution integrating their
programs on a contractual basis to obtain more
sales impact that they could achieve alone

• Wholesaler-sponsored Voluntary Chains


Types of Contractual VMS • Retailer cooperatives
• Franchise Organizations
Horizontal Marketing System

Two or more unrelated companies put together resources or programs t


o exploit an emerging marketing opportunities
Integrating Multichannel Marketing
System
Strategies and tactics of selling through one channel reflect the strategies and tactics of
selling through one or more other channels

Online Retailers
CONFLICT,
COOPERATION
AND
COMPETITION
Types of Conflict and Competition
Horizontal Channel Conflict
01 occurs between channel members at the same
level

Vertical channel conflict


02 occurs between different levels of the channels

Multichannel conflict
03 exists when the manufacturer has established
two or more channels that sell to the same
market.
Causes of Channel
Conflict

Goal Incompatibility 01

Unclear roles and rights 02

Differences in perception 03

Intermediaries’ dependence 04
on the manufacturer
Strategies to Manage Channel
Conflicts
Superordinate goals Co-option

Strategic Justification

Diplomacy, Mediation
Employee exchange & Arbitration

Dual compensation

Joint membership Legal Recourse


DILUTION &
CANNIBALIZATION
Marketers must be careful not to
dilute their brands through
inappropriate channels
LEGAL AND ETHICAL
ISSUES IN CHANNEL
RELATIONS
E-COMMERCE
MARKETING PRACTICES
Pure-Click
Companies
those that have launched a website
without any previous existence as a
firm
E-Commerce
Success
Factors

• Companies must setup & operate their e


commerce websites carefully
• Customer service is critical
• To improve conversion rates, companies
should make the website fast, simple and
easy to use
• Ensuring security and privacy online remains
important
B2B
E-Commerce

• makes markets more efficient giving buyers


easy access to a great deal of information
from different suppliers online
Brick & Click
Companies
those that have launched a website
without any previous existence as a
firm
Strategies in Brick & Click
Companies
100

Offer different brands or


products on the internet
80

60
Offer offline partners higher
commissions to cushion negative
40
impact

20
Take orders online but have retailers
deliver and collect payment
0
M Commerce
Marketing
Practices

Mobile Commerce
MANAGING RETAILING
Presented by:

Rhenz Haldos
Outline
01 Defining Retailing

02 Types of Retailers & New Retail


Environment

03
Retail Marketing Decisions
Defining Retailing 01
Retailing
Retailing includes all the
activities in selling goods or
services directly to final
consumers for personal,
non business use.
Types of Retailers &
New Retail Environment
02
Store Retailers
Different format of store
retailers will have different
consumer preferences for
service levels and specific
services, positioning
themselves as offering one
of four levels of service:

1. Self Service
2. Self-Selection
3. Limited Service
4. Full Service
Major Types of Store Retailers
Nonstore Retailing

Nonstore retailing has been


growing much faster than
store retailing, which falls
into four major categories:

1. Direct Selling
2. Direct Marketing
3. Automatic Vending
4. Buying Service
Corporate Retailing
These organizations achieve
economies of scale, greater
purchasing power, wider brand
recognition and better-trained
employees, under four types:

1. Corporate Chain Stores


2. Voluntary Chains
3. Retailer and Consumer
Cooperatives
4. Franchises
5. Merchandising Conglomerates
Major Types of Corporate Retail Organizations
The New Retail Environment
1. New Retail forms and Combinations
• Bookstores feature coffee shops
2. Growth Intertype Competition
• Product expansion from grocery to clothing
3. Competition between Store-based and Nonstore-based Retailing
• Honestbee,Grabfood
4. Growth of Giant Retailers
• SM Hypermarket, SM Savemore
5. Decline of Middle Market Retailer
• Growth emerges between luxury offerings & high discount pricing e.g. Marks & Spencer
6. Growing Investment in Technology
• Paymaya, Wechat Pay, Gcash
7. Global Profile of Major Retailers
• MINISO, UNIQLO, H & M, IKEA
8. Growth of Shopper Marketing
• Instore advertising
Marketing Decisions 03
Marketing Decisions
1. Target Market
• Product assortment, décor, advertising messages,
media, price and service level
2. Channels
• Multiple channels such as internet, and catalog businesses
must be fully intertwined
3. Product Assortment
• Narrow and Deep (delictessen), Broad and Shallow (cafeteria),
Broad and Deep (large restaurant)
4. Procurement
• Demand and forecasting, stock and inventory control,
space allocation, display
5. Prices
• Must be set in relationship to the target market
Marketing Decisions (cont.)
6. Service and Store Atmosphere
• Prepurchase, postpurchase, and ancilliary services and
store’s physical layout
7. Store Activities and Experiences
• Real life customer service and experience, no delivery lag time
8. Communications
• Ads, special sales, coupons, shopper reward programs
9. Location
• Central Business Districts (CBD) – most heavily trafficked areas; downtown
• Regional Shopping Centers – malls containing 40 to 200 stores
• Community Shopping Centers – 20 to 40 smaller stores
• A location within a larger store – Airports, Schools, Department Stores
• Stand-alone Stores – Landers, S&R, IKEA
CHAPTER 16
Managing Retailing,
Wholesaling and Logistics
ANA MARIE CAPERAL
Private Labels
Also called a reseller,
store, house, or
Private Labels
distributor brand

It is a brand that
retailers and
wholesalers
develop.
TOP 10 PRIVATE LABEL CATEGORIES
Role of Private
Labels
Why do
intermediaries
sponsor their
own brands?
Manufacturer’s Response to the Private Label
Threat

01 Fight selectively

02 Partner effectively

03 Innovative brilliantly

04 Create winning value propositions


WHOLESALING
Wholesaling includes all
the activities in selling
goods or services to those
who buy for resale or
business use.
Major wholesaler types
Major wholesaler types
Why are
wholesalers use at
all?
Wholesalers are more efficient in performing
one or more of the following functions:

01 Selling and promoting

02 Buying and assortment building

03 Bulk breaking

04 Warehousing
05 Transportation

06 Financing

07 Risk bearing

08 Market information

09 Management services and counseling


Market
Logistics
Market logistics includes planning
the infrastructure to meet demand,
then implementing and
controlling the physical flows of
materials and final goods from
points of origin to points of use, to
meet customer requirements at a
profit.
FOUR STEPS
3
Developing 4
2
1 operational
excellence in sales Implementing
Deciding on Selecting the
forecasting, the solution
the best channel
warehouse with the best
company’s design
management, information
value network
transportation systems,
proposition strategy for
management, and equipment,
to its reaching the
materials policies and
customers customers
management procedure
Integrated
Logistic Systems
Includes materials management,
material flow systems, and
physical distribution, aided by
information technology.
Market-Logistics Objectives

• “getting the right goods to t


he right places at the ri
M = T + FW + VW + S ght time for the least co
T = total freight cost of proposed system st”
FW = total fixed warehouse cost of proposed system

VW = total variable warehouse costs (including inventory)


of proposed system

S = total cost of lost sales due to average delivery delay


under proposed system
.
Market-Logistics Decisions

ORDER PROCESSING WAREHOUSING INVENTORY TRANSPORTATION

The elapsed time Every company must Salespeople would Transportation choices
between an store finished goods like their companies affect product pricing,
order’s receipt, until they are sold, to carry enough stock on-time delivery
delivery and because production to fill all customer performance, and
payment. and consumption orders immediately condition of goods
cycles rarely match affect customer
satisfaction
Determining Optimal Order Quantity
Market-logistics strategies must be
derived from business strategies, rather
than solely from cost considerations.
The logistics system must be
information-intensive and establish
electronic links among all the significant
parties. Finally, the company should set
its logistics goals to match or exceed
Organizational
competitors’ service standards and
should involve members of all relevant
Lessons
teams in the planning process.
ZARA 04
About the Company

Zara is one of the largest


international fashion companies. It bel
ongs to Inditex, one of the world’s large
st distribution groups.
The customer is at the heart of our un
ique business model, which includes de
sign, production, distribution and sales t
hrough our extensive retail network.
Story, Core Values, and Customer Experience

Story
Zara’s story begins with the opening of our first store in the
Spanish coastal city of A Coruña in 1975, an early milestone in
the company’s long history.

Core Values
Over the years, Zara has remained faithful to its core values,
expressed simply in the same four key words that define all
our stores: beauty, clarity, functionality and sustainability.

Customer Experience
Zara’s Join Life collection and the eco-stores are two examples of
developments. The installation of clothing recycling containers
in-store and a scheme providing for free at-home collection of used
garments to complement the delivery of online orders.
ZARA’s COMPETITORS
What are the differences?

ZARA H&M
Spain, 1975 (2,200 stores) Sweden, 1947 (4,968 stores)

Efficient and integrated supply chain; Designer Collaborations and


Speed through control Franchising

Lower quantities; shorter lead time Large quantities; Inventory Crisis

Numerous styles: “Customer co- Predict what the trends will be and
creation” produce twice a year

Cannot Miss Strategy: Perceived


Hit or Miss Strategy
scarcity for “Newness”
4Es: Experience, Exchange, 4Ps: Product, Price, Promotion &
Evangelism; Everyplace Placement
Focus on Exchange for Value: Time, Focus on Price: Pile it high, sell it
Money & Convenience cheap

Pull Strategy  Customer Focus Push Strategy  Brand Focus


 Online Retailing
• This allows Zara to connect with
consumers across the world, while
providing them access to all its latest
collection
• With a large fan base on social
networking sites, it could leverage
those to promote its online store
 Establishing Zara Stores in ne markets
• It could follow the trend that made it ZARA
successful in Europe, by establishing
2. How is Zara going to
stores in prestigious areas
• They need to ensure their
expand successfully all
distribution network is upto the task over the world with the
as “fresh” and “fast” fashion are same level of speed an
Zara’s biggest strengths d instant fashion?
Thank You!
^_~

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