การจัดการช่องทางการจัดจำหน่าย Distribution Channel Management Chapter 1 Marketing Channels Structure and Functions

Chapter 1 Outlines Learning Objectives - The meaning of marketing channel Why manufacturers choose to use intermediaries between themselves and end-users - What marketing flows define the work of the channel Members of marketing channel and the flows in which they specialize Framework for marketing channel design and implementation

Marketing Channels The importance of Marketing Channels to Today’s Business - Gatekeeper between manufacturer and end-user Main differentiator of Company’s market offering from its competitors Impact to end-users overall perception and satisfaction Key strategic marketing asset in beating rivals Tools to help companies operate more profitably and do better jobs of meeting customers’ demands and preferences

Marketing Channels Basic Definition of Marketing Channel “A Marketing Channel is a set of interdependent organizations involved in the process of making a product or service available for use or consumption”

Marketing Channels Points of Discussion Marketing Channel often viewed as key strategic asset to manufacturer Why Manufacturers not selling all products and services directly to all end-users Why marketing channel ever change or new Marketing channels ever emerge

Marketing Channels Demand-side Factors As a facilitation of search Products/services are easier to find Target end-users are more readily to reach Adjustment of natural discrepancy between large product quantity being produced and wide variety being demanded Channel members perform function of sorting goods

Marketing Channels Supply-side Factors Routinization of transactions to minimize distribution cost - Standardization of goods and services - Channel inventory management - Reduction in number of contacts

Marketing Channels Points of Discussion Intermediaries participate in the work of marketing channel add value and help reduce cost in the channel - What are the functions performed by intermediaries? The largest component of carrying cost of inventory Capital costs are the opportunity costs Members in the channel can be eliminated or substituted, but the flows performed by these members cannot be eliminated

The Work of Marketing Channels Eight Universal Flows in Marketing Channel

Marketing Channels Key Members in Marketing Channel Manufacturers (Branded VS. private-label) Intermediaries (Wholesale, retail, specialized) End-users (Business customer, individual consumers) Channel Captain – Prime mover in establishing and maintaining the channel links

Marketing Channels Forms of Retail Intermediaries Department Stores Mass Merchandisers Specialty Stores Category Killers Convenience Stores Catalogers On-line Retailers

Marketing Channels Specialized Intermediaries perform specific flow Financial Flow (Insurance, Finance, credit card Companies) Physical Possession Flow (Logistic and shipping firms) Ordering and Payment Flow (Information technology firms) Promotion Flow (Advertising agencies) Marketing Intelligence (Marketing research firms)

Framework for Channel Analysis The Marketing Channel Challenge involves two major processes Designing the right channel which involve - Segmenting the market - Choosing which segment to target - Right channel structure to meet target end-users demands at the most efficient way

Framework for Channel Analysis The Marketing Channel Challenge involves two major processes Implementation of the design - Understanding each channel member’s source of power - Degree of dependency - Potential of channel conflict - Channel coordination for optimal working environment

Framework for Channel Analysis

Marketing Channels Points of Discussion The Concept of Interdependence and the value of Specialization - Demands for service outputs are used for segmenting the market

Channel Design The meaning of Service Output Service Outputs include “The value-added services created by channel members and consumed by end-users along with the product purchased” Service Outputs include Bulk-breaking Spatial convenience Waiting and delivery time Assortment and variety Customer service Product/Market/usage information provision

Channel Design Channel Structure Decision involve with three main elements What kinds of intermediaries to use (own sales force vs. distributor) The exact identity of the channel partner (specific characters of channel member) 3. How many of each type of channel member (Intensive, selective or exclusive)

Channel Design Points of Discussion Why channel manager not target all the segments identified in the segmentation analysis?

Channel Design Distribution Gap “It’s the constraints that prevent channel manager of not implementing the optimal level of distribution due to 1. Managerial bounds (internal influences) 2. Environmental bounds (external influences) 3. Competitor bounds (external influences)

Channel Design Distribution Gap There are gaps on both Demand and Supply sides: - On the demand side---at least one of the service output demands is not being appropriately met by the channel (either undersupplied or oversupplied) - On the supply side---at least one of the flows in the channel of distribution is carried out at too high a cost

Channel Implementation Channel members fail to perform the flow tasks due to channel conflicts Types of conflicts among members - Goal conflicts – different goal and objectives - Domain conflict – disagreements over domain of action and responsibility - Perceptual conflict – difference in perceptions of the marketplace

Channel Implementation Managing conflict by assessing the true degree of each issue relevant to channel management - Frequency of disagreement - Intensity of disagreement - Importance of the issue Conflict resolution through the use of economic incentives coupled with good communication

Channel Institutions The holistic approach in channel management - Retailing based format – connecting point between channel and end-user - Wholesaling based format – distribution’s “back room” - Logistics firms – specialists that co-ordinate activities of the marketing channel

Channel Institutions The holistic approach in channel management - Supply chain parties – involve upstream and downstream toward end-users - Franchising business – small business people operate under the guidance from large-scale parent company