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1 © Arvind Rangaswamy, All Rights Reserved October 25, 2003 e-Marketing (EMBA) Online Marketing Strategy (Distribution) Arvind Rangaswamy Web address:
2 © Arvind Rangaswamy, All Rights Reserved Roles for Todays Marketing Manager ² Select target markets to pursue (and specify target markets not to pursue) ² Define the brand ² Optimize the channel mix ² Articulate and measure the value of marketing investments ² Enhance customer relationships ² Identify and develop new businesses
4 © Arvind Rangaswamy, All Rights Reserved Roles of Marketing Channels: Delivering Service Output Levels ² Lot size (Aggregate/Disaggregate) ² Convenience (Spatial, Ordering, …) ² Waiting time ² Variety and assortment ² Personalization/customerization ² Service (Pre-sale and Post-sale) ² Price discovery? ² Liquidity? The Internet is altering the relative roles of intermediaries and manufacturers in providing these service output levels.
5 © Arvind Rangaswamy, All Rights Reserved Primary Benefit of Intermediaries: Increased Channel Efficiency C C C (a) Number of contacts M x C = 3 x 3 = (b) Number of contacts M + C = = 6 M = ManufacturerC = CustomerD = Distributor D M M M C C C M M M Source: Textbook
6 © Arvind Rangaswamy, All Rights Reserved Intermediaries Also Generate Value Market Information Monitoring sales trends, inventory levels, competitive behavior Promotional Effort Banner ads, sales promotions, traditional advertising support, personal selling Transactional Activities Bargaining on price and terms, order processing, credit, inventory and assortments Storage and Transportation Warehousing, transportation to buyer, sorting and packaging into desired forms Facilitation Activities Credit card processing, invoicing, shipping confirmations Installation and Service Technical support, customer service lines, warranty work, repair, spare parts, etc. Adapted From:Harper W. Boyd, Jr., Orville C. Walker, Jr., and Jean-Claude Larreche, Marketing Management, 2nd ed., Burr Ridge, IL: Irwin 1995, and George S. Day, Market Driven Strategy: Processes for Creating Value, New York: The Free Press, 1990, 220–221
7 © Arvind Rangaswamy, All Rights Reserved Yes, you can eliminate intermediaries. No, you cannot eliminate their functions and still serve the same customer needs!
8 © Arvind Rangaswamy, All Rights Reserved The 2Is and Distribution Match distribution channel with segment needs more precisely Customer service is tailored across channels Tight linkages between firm, suppliers and customers facilitate collaborative relationships that enhance logistics, inventory planning and market responsiveness Individualization Interactivity Distribution Source: Textbook
9 © Arvind Rangaswamy, All Rights Reserved Customer Contact Channels ² Direct sales force ² Web site ² Telesales/call center ² Catalog ² ² Retail outlets ² Kiosk? ² PDA/cell phone?
10 © Arvind Rangaswamy, All Rights Reserved As a Channel, Internet Separates Choice from Purchase For Digital Products
11 © Arvind Rangaswamy, All Rights Reserved
12 © Arvind Rangaswamy, All Rights Reserved Impact of Online Channel on Offline Sales Source: Forrester Research, Sept 2000 Currently, most retailers are not able to track customers across web site, catalog, and store.
13 © Arvind Rangaswamy, All Rights Reserved New Types of Intermediation Due to Internet ² eTailing: The Internet as a new retail channel ² Multi-channel Marketing ² New types of Intermediaries (major new channel opportunities of the Net) u Infomediary/Metamediary (Matchmakers and Bundlers) u Marketmakers (e.g., B2B exchanges) u Speediaries (e.g., Akamai, FedEx) u ….. ² Emerging Wireless channels
14 © Arvind Rangaswamy, All Rights Reserved eTailing: Key Questions ² Is there any enduring advantage to being a category killer? Narrow (e.g., fridgedoor.com, uglies.com) versus large assortments (Amazon, eBay, Techsavvy.com; grainger.com) ² Is there an enduring advantage in stressing service over price? Service (e.g., amazon.com) versus Price (buy.com and half.com) ² Is there any enduring advantage of auctions? Auctions (e.g., eBay and onsale) versus fixed price (e.g.,Half.com) ² Is there an enduring advantage for clicks+bricks?
22 © Arvind Rangaswamy, All Rights Reserved Managing Multi-channel Contacts ² Multi-channel marketing is not the same as multiple channel marketing. ² Implement a customer-centric business and IT architecture before large-scale deployment of multi- channel marketing. ² Ensure consistency of brand and customer experience across channels. ² Deploy resources across channels commensurate with the value of each targeted segment.
23 © Arvind Rangaswamy, All Rights Reserved Multi-Channel Brand Management at Victorias Secret Store Catalog Web site
24 © Arvind Rangaswamy, All Rights Reserved Multi-channel Promotions at Victorias Secret ² Stores u URL on shopping bags u Catalogs in stores u Brand ads include URLs ² Catalogs u Callouts for web site u Scent strip for Victorias Secret Beauty ² Web site u Sign up for catalog online u to customers for store-specific promotions u Order from catalog online u Store locator Source: Anne Marie Blaire, Victorias Secret, June 2000 Note: Products purchased at the web site cannot be returned at a store and vice versa.
25 © Arvind Rangaswamy, All Rights Reserved Traditional Multiple-Channel Management Source: Adapted from New York Times Know thy customer, 14 February. Web Tele-center Direct Sales Retailer Reseller Distributor Direct Channels Customers and Prospects Customers and Prospects Indirect Channels Company
26 © Arvind Rangaswamy, All Rights Reserved Multi-Channel Management Driven by CRM Systems Source: New York Times Know thy customer, 14 February. Web Tele-center Direct Sales Retailer Reseller Distribution Direct Channels Customers and Prospects Customers and Prospects Indirect Channels Customer Relationship Management Customer Relationship Management
27 © Arvind Rangaswamy, All Rights Reserved Source: Adapted from Gates, Bill the speed of thought. New York: Warner Books. Network Infrastructure Emerging Channel Structures are Flatter but More Complex Chips Sales and Distribution Databases Financial Systems Network Integrators Application Software Operating Systems Retail Stores Online storesDealers Mail Order IBMMicrosoftOracleOthers BaanJD EdwardsSAPOthers Cisco3 ComLucentOthers EntexINSVanstarWang WordSiebelOthers DOS and WindowsOS/2MacUnixLinux Computer Compaq DellIBM Hewlett Packard Others Intel Architecture MotorolaAMDOthers Meta-mediary(e.g., Accenture) Customers
28 © Arvind Rangaswamy, All Rights Reserved ² Marketing channels are now being subjected to irreversible and major technology-induced transformations: u Undertake channel experiments (with both current and new partners) to design channels that deliver better value to your customers. u If you focus on doing what is right for your customers long- term (and not necessarily what is good for your current channel members), your channel structure will be realigned appropriately in the converging economy. Action Guidelines
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