A FRAMEWORK for MARKETING MANAGEMENT Kotler KellerCunningham Chapter 13 Designing and Managing Value Networks and Channels

13-2 Chapter Questions What is a marketing channel system and value network? What work do marketing channels perform? What decisions do companies face in designing, managing, evaluating, and modifying their channels? How should companies integrate channels and manage channel conflict? How are companies managing e-commerce marketing? © Copyright 2008 Pearson Education Canada

13-3 Profile: Canadian Marketing Excellence MEDIAGRIF INTERACTIVE TECHNOLOGIES INC. Developing new channels and creating real value isn't easy Quebec’s ebusiness Mediagrif Interactive Technologies Inc. has joined ebay and Amazon in forging into this challenging industry Effectively it’s an ebay for business, and is a leading provider of government bidding and e-procurement In 2000 the company went public and by 2004 was awarded Deloitte and Touche’s Canadian Technology Fast 50 award © Copyright 2008 Pearson Education Canada

13-4 Marketing Channels Marketing channels are sets of interdependent organizations involved in the process of making a product or service available for use or consumption © Copyright 2008 Pearson Education Canada

13-5 Channels and Marketing Decisions Push strategy Pull strategy © Copyright 2008 Pearson Education Canada

13-6 Role of Marketing Channels Many producers lack resources to direct market products Producers may be able to earn greater ROI by investing in main business Direct marketing is not always feasible © Copyright 2008 Pearson Education Canada

13-7 Figure 13.1 How a Distributor Increases Efficiency © Copyright 2008 Pearson Education Canada

13-8 Table 13.1 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 © Copyright 2008 Pearson Education Canada

13-9 Figure 13.2 Marketing Channel Flows © Copyright 2008 Pearson Education Canada

13-10 Consumer Marketing Channels © Copyright 2008 Pearson Education Canada

13-11 Industrial Marketing Channels © Copyright 2008 Pearson Education Canada

13-12 Designing a Marketing Channel System Analyze customer needs Evaluate major channel alternatives Identify major channel alternatives Establish channel objectives © Copyright 2008 Pearson Education Canada

13-13 Channels Produce Five Service Outputs Lot size Waiting/delivery time Spatial convenience Product variety Service backup © Copyright 2008 Pearson Education Canada

13-14 Identifying Channel Alternatives Types of intermediaries Number of intermediaries Terms and responsibilities © Copyright 2008 Pearson Education Canada

13-15 Number of Intermediaries Exclusive Selective Intensive © Copyright 2008 Pearson Education Canada

13-16 Channel-Management Decisions Selecting channel members Training channel members Motivating channel members Evaluating channel members Modifying channel members © Copyright 2008 Pearson Education Canada

Cranium Key criterion for toymaker Cranium is how well an intermediary can support the company’s drive for growth Cranium often works with channel members that typically do not carry toys, such as Starbucks Once Cranium caught on, the game was sold through department stores and discount outlets © Copyright 2008 Pearson Education Canada

13-18 Channel Integration and Systems Vertical marketing systems Corporate VMS Administered VMS Contractual VMS Horizontal marketing systems Multichannel marketing systems © Copyright 2008 Pearson Education Canada

13-19 Managing Channel Conflict Adoption of superordinate goals Co-optation Diplomacy Mediation Arbitration Wal-Mart is well known for its ability to manage conflict channel goals © Copyright 2008 Pearson Education Canada

13-20 E-Commerce Marketing Practices Pure-click Brick-and-click Brick-and-mortar © Copyright 2008 Pearson Education Canada

13-21 For Discussion Think of your favourite 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? © Copyright 2008 Pearson Education Canada