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Chapter 15 Electronic Marketing Channels
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Electronic Channels Any channel that involves the use of the Internet as a means of reaching the customer B2C B2B
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Market Potential for Electronic Channels
How many customers are likely to shop online? What are the demographics of customers who like to shop online?
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Profile of Online Shoppers
15 • Age range of 25 to 54 • Income level range $35,000 to about $99,999 • College graduates & those with postgraduate education make up 54% • Professional/managerial occupations make up 32% Highest Percentages
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CONSUMER REASONS FOR/AGAINST ONLINE SHOPPING,
Source: adapted from Catherine Finamore (2000), "The Connected Consumer," E-Retail Intelligence Update, PricewaterhouseCoopers, January, pp. 5-8.
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Advantages & Disadvantages
15 Advantages of Electronic Marketing Channels Global scope & reach Convenience/rapid transaction processing Information processing efficiency & flexibility Data-based management & relationship capabilities Lower sales & distribution costs
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Advantages & Disadvantages
15 Disadvantages of Electronic Marketing Channels Lack of contact with actual products & delayed possession 2. Fulfillment logistics not at Internet speed or efficiency Clutter, confusion, & cumbersomeness of Internet Nonpurchase motives for shopping not addressed Security concerns of customers
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Structure of Electronic Marketing Channels
15 Disintermediation versus reintermediation Information flow versus product flow Virtual channel structure versus physical channel structure Three Key Phenomena
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Disintermediation and Reintermediation
15 Disintermediation Reintermediation Intermediaries become “unnecessary” because producers gain exposure to vast numbers of customers in cyberspace Shifting, changing, or adding middlemen to the channel Amazon.com Auto-By-Tel Corp. Peapod, Inc. Dell Computer Corp.
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Channel Management Implications
15 Objectives & strategies of the firm & electronic marketing channels • Role of electronic marketing channels in the marketing mix • Channel design & electronic marketing channels • Channel member selection & electronic marketing channels
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Objectives & Strategies of the Firm
15 Role of distribution more complex because of electronic marketing channels = Channel manager must consider whether Internet-based channels fundamentally affect the firm’s decision about the priority given to distribution
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The Marketing Mix 15 The Internet arms large numbers of customers with more information about products & services to level the playing field The fourth P, place (distribution), may assume a larger role relative to the other three variables for more & more firms
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Channel Design 15 The channel manager of retailers, industrial, and B2B markets should provide “channel-surfing” consumers with whatever channels or combinations of channels they desire = A facet of the development of an effective multichannel marketing strategy
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Channel Member Selection
15 Complexity grows as channel member selection may include the need to avoid conflict with conventional channel members = The need to select members carefully
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Dual Distribution with Electronic Channels
Conflicts may arise Domain conflict Free riding Goal conflict Perceptual differences
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