Chapter 08 - Rosenbloom 8ed

Marketing Channels
Part 2: Developing the Marketing Channel
A Management View
8e
Rosenbloom
Part 2:CHAPTER 8
Developing the Marketing Channels
8
CHAPTER
Target Markets and

Channel Design
Strategy
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① Importance of market variables
Learning Objectives
② Framework of market analysis
③ Market geography
④ Impact of market size
⑤ Market density’s effects
⑥ Influence of market behavior
⑦ Changes in market behavior
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Objective
Market Variables
1
The target market’s needs and

wants should drive the manner in
which the channel manager shapes
the design of the firm’s marketing
channels.
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Objective
Framework for Market Analysis
2
Market Market
geography behavior
Market Market
size density
Target
Markets
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Objective
Market Geography
3
Market geography refers to the geographical

extent of markets and where they are located.
Channel manager’s task:
To evaluate market geography relative

to channel structure to ensure that
the structure is able to serve the markets
effectively and efficiently.
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Locating Markets
Channel manager delineates geographical
locations of target markets by using a
combination of the following:
1. The Bureau of Census

data for geographical entities such as
states, regions/divisions, counties,
metropolitan statistical areas, towns &
townships
2. Postal ZIP codes
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Tracking Changes in Market Geography
In the U.S. Globally
A high degree of mobility Southeast Asian countries &
within the U.S. means former Eastern bloc

countries of central &
that market geography
eastern Europe have
changes frequently.
become key locations.
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Market Size
Objective
4
Market size refers to the number of buyers
or potential buyers (consumer or industrial) in
a given market.
Channel manager’s task:
When using Bucklin’s model for

market size data, it is important also to
consider the peculiarities of particular situations
and other relevant variables.
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Market Density
Objective
Market density refers to the number of

buyers or potential buyers per unit of
geographical area.
This market dimension’s

relationship to channel structure
is illustrated in the concept of
efficient congestion.
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Market Density & Channel Strategy
Efficient congestion
Congested (high-density)
markets can promote
efficiency in the performance of
several basic distribution tasks,
particularly those of transportation,
storage, communication, and
negotiation.
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Market Density & Channel Strategy
The opportunity to achieve a

Strategic high level of customer access at
Implication low cost is higher in dense markets
than in more dispersed ones.
=
Manufacturers of a wide array of products
seek out distributors and retailers that
operate in dense markets.
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Objective
Market Behavior
6
Market behavior consists of four

Sub-dimensions:
1. When the market buys

2. Where the market buys
3. How the market buys
4. Who buys
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When the Market Buys
Variations occur:
Daily Weekly Seasonally
Implications for the channel manager:

1. Variations create peaks & valleys in the manufacturer’s
production schedule.
2. He or she should attempt to select channel members who
are in tune with these changing patterns.
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Where the Market Buys
1. Determined by the types of outlets from which final

buyers choose to make their purchases
2. Determined by the location of those outlets
Implications for the channel manager:
1. He or she should know where customers generally

buy particular types of products
2. He or she should know whether these patterns
may be changing.
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How the Market Buys
1. Large quantities 1. Small quantities
2. Self-service 2. Assistance by
salespeople
3. One-stop shopping 3. Buying from several
stores
4. Impulse buying Versus 4. Extensive decision
making prior to purchase
5. Cash 5. Credit
6. Shopping at home 6. Shopping at stores
7. Expending substantial effort 7. Expending little effort
8. Demanding extensive service 8. Demanding little service
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Who Buys
Who makes the physical purchase?
Affects the type of

retailers chosen in
the consumer market
May influence the kinds of

channel members used to
serve industrial markets
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Who Buys
Who decides to make the purchase?
In context of family unit at

consumer level
Buying centers at
industrial level
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Buying Centers
Sets of people who participate in industrial
buying decisions and who are responsible for
the consequences resulting from the decision
Users
Influencers
Deciders
Approvers
Buyers
Gatekeepers
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Changes in Market Behavior
Objective
Channel
Manager’s
Role
Must be tuned in Needs to determine

to changes that whether changes
are likely to occur are temporary or
long term
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Implications of Changes
Good personal
selling at the retail level
Making a comeback in department

and specialty store sectors due to
increasing consumer demand for
knowledgeable and helpful
salespeople
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Retail stores with

Spartan surroundings &
minimum service but
very low prices
Consumers demanding membership in

warehouse
clubs (Sam’s Club)
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Mail-order
buying
Shoppers are trying to save time and avoid

the inconvenience of shopping at crowded stores
and fighting traffic congestion
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Online
Shopping
Personal computers are a means for consumers

to supplement their in-store shopping
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Auto retailing &

foreign auto
manufacturers
Car buyers demanding fewer hassles &

confrontations typically common when buying a
car
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Internet
Shopping
Growing in all sectors, especially in

industrial or B2B
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Innovations
undertaken by
channel member
Kohl’s racetrack layout exposes customers

to the maximum amount of merchandise
in the shortest time.
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Discussion Question #3
By the end of the first decade of the twenty-first century, the anti-
junk food movement had really begun to take hold in the U.S. Of
particular concern was the sale of junk food through vending machines
in schools. The easy availability of salty snacks, candy and sodas made
easily available from the machines provided a level of temptation that
was just too enticing for many students to resist. But could vending
machine channels that worked so effectively to sell junk food in schools
work just as well for selling healthier foods? This is the question that
Stonyfield Farm, a Londonderry, New Hampshire maker of organic
yogurt, is seeking the answer to by putting health-food vending
machines in a number of New England high schools. Stonyfield is
betting that attractive displays of healthy snacks and the convenience
provided by vending machines will prove to be just as effective in
enticing students to buy healthy foods as they were in getting them to
buy junk foods.
Do you think the vending machine channel will work for healthy
foods as well as this channel worked to sell junk food to students? Why
or why not?
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Marketing Channels

Part 2: Developing the Marketing Channel

Target Markets and

② Framework of market analysis

④ Impact of market size

⑤ Market density’s effects

⑥ Influence of market behavior

⑦ Changes in market behavior

The target market’s needs and

Market geography refers to the geographical

Channel manager’s task:

To evaluate market geography relative

1. The Bureau of Census

2. Postal ZIP codes

In the U.S. Globally

A high degree of mobility Southeast Asian countries &

within the U.S. means former Eastern bloc

Channel manager’s task:

When using Bucklin’s model for

Market density refers to the number of

This market dimension’s

The opportunity to achieve a

Market behavior consists of four

1. When the market buys

Daily Weekly Seasonally

Implications for the channel manager:

1. Determined by the types of outlets from which final

2. Determined by the location of those outlets

Implications for the channel manager:

1. He or she should know where customers generally

Affects the type of

May influence the kinds of

Who decides to make the purchase?

In context of family unit at

Must be tuned in Needs to determine

Making a comeback in department

Retail stores with

Consumers demanding membership in

Shoppers are trying to save time and avoid

Personal computers are a means for consumers

Auto retailing &

Car buyers demanding fewer hassles &

Growing in all sectors, especially in

Kohl’s racetrack layout exposes customers

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