Marketing 624

Channels of Distribution Management

Marketing Channel Strategy

 Channel Strategy

The broad principles by which

the firm expects to achieve its
distribution objectives for its
target market(s)
 Six Fundamental Strategic
Distribution Decisions
What role should distribution play in the firm’s
overall objectives and strategies?

What role should distribution play in the

marketing mix?

How should the firm’s marketing channels be

designed to achieve its distribution objectives?
 Six Fundamental Strategic
Distribution Decisions (Cont’d)
What kinds of channel members should be
selected to meet the firm’s distribution
objectives?

How can the marketing channel be managed to

implement the firm’s channel design effectively
and efficiently?

How can channel member performance be

evaluated?
 Channel Design

Those decisions involving the

development of new marketing
channels where none had existed
before, or the modification of
existing channels
 Channel Design and
Differential Advantage

The design of the channel should

contribute to the firm’s quest for
Differential Advantage
 Paradigm of the
Channel Design Decision

Recognize need for channel design decision

Set and coordinate distribution objectives
Specify distribution tasks
Develop possible alternative channel structures
Evaluate variables affecting channel structure
Choose the best channel structure
Select the channel members
Channel Design Decision

Phase 1:
Recognize Need for Channel Design
Decision
Obvious examples pp. 200-201 in text
But many times the need to make channel
design decisions is not obvious
 Channel Design Decision

Phase 2:
Set & Coordinate Distribution Objectives
Become familiar with objectives of firm
Set explicit distribution objectives
Check for congruency
Channel Design Decision

Phase 3:
Specifying Distribution Tasks
Don’t underestimate all of the “nuts
and bolts” necessary to make
products and services conveniently
available to customers
 Channel Design Decision

Phase 4:
Develop Alternative Channel Structures
Number of levels
Intensity at various levels
Types of intermediaries
 Channel Design Decision
Phase 5:
Evaluate Variables Affecting channel
Structure
Market variables
Product variables
Company variables
Intermediary variables
Environmental variables
Behavioral variables
Heuristics play an important role
 Channel Design Decision
Phase 6:
Choosing the “Best” Channel Structure

Product-based models (Aspinwall)

Financial Approach
Transaction Cost Analysis Approach
Management Science Approach
Judgmental –Heuristic Approach
Channel Design Decision

Phase 7:
Select the Channel Members

Finding perspective channel members

Applying selection criteria
Securing perspective channel members
 Target Markets and Channel
Design Strategy

Work “backwards” from what the

final customers wants. A “bottom
up” approach.
Framework for Market
Analysis
Market geography
Market size
Market density
Market behavior
when customers buy
where customers buy
how customers buy
who buys
 Who Buys?

Who makes physical purchase?

Who uses the product?
Who influences the buying decision?
Channel Management

The administration of existing

channels to secure the cooperation
of channel members in achieving
the firm’s distribution objectives
Motivating Channel
Members

 Find out needs and problems

 Offer support consistent with
channel member needs
 Provide leadership
 Learning About Channel
Members Needs and Problems

“Grapevine” (informal communications

network)
Inside research
Outside research
 Marketing channel audit
Distributor advisory councils
 Support for Channel
Members

Cooperative approach
Partnership approach
Distribution programming approach
 Product Issues in
Channel Management

 New Product Planning and Development

Product Life Cycle

Strategic Product Management
New Product Planning and
Development

Channel member input

Acceptability
Fit with channel member assortments
Education and training
Problems?
 Product Life Cycle
What are the channel management
implications during each stage?
Introduction
Growth
Maturity
Saturation
Absolute decline
 Strategic Product
Management
 Product differentiation
 Product positioning
 Product line expansion
and contraction
 Trading up and trading
down
 Brand strategy
 Service strategy
Pricing in Channel
Management
Cost
Market
Competition
Channels
Promotion Through the
Channel

Vs.

 Pull
versus Push
Promotional Strategy
 Classic Push
Promotional Strategies
Cooperative advertising
Promotional allowances
Displays and selling aids
In-store promotions
Contests and incentives
Special promotional deals and merchandise
campaigns
“Kinder and Gentler” Push
Promotional Strategies

Training
Quotas
Missionary selling
Trade shows