Anas Iftikhar

2815

Strategic Marketing Management

1. What is meant by a marketing
channel?

A: A marketing channel consists of

individuals and firms involved in the
process of making a product or
service available for use or
consumption by consumers or
industrial users.
 CHANNEL STRUCTURE AND
ORGANIZATION

• Marketing Channels for Consumer

Goods and Services
 Direct Channel
 Indirect Channels
FIGURE: Common marketing channels for
consumer goods and services
 CHANNEL STRUCTURE AND
ORGANIZATION

• Marketing Channels for Business Goods

and Services
 Industrial Distributor
 Agent
FIGURE 13-4 Common marketing channels
for business goods and services
 CHANNEL CHOICE AND
MANAGEMENT

• Factors in Choosing a Marketing

Channel
 Provide the Best Target Market Coverage
 Best Satisfy the Target Market’s
Buying Requirements
 Be the Most Profitable
 CHANNEL CHOICE AND
MANAGEMENT

• Factors in Choosing a Marketing

Channel
 Target Market Coverage
• Intensive Distribution

• Exclusive Distribution

• Selective Distribution
 Intensity of Market Coverage
• Intensive Distribution
– Using all available outlets to distribute a product.
• Convenience products with high replacement rates
– Provides availability and
reduces search time
– Availability is more important
than outlet type

15 | 9
 Intensity of Market Coverage (cont’d)
• Selective Distribution
– Using only some available outlets to distribute a
product Toyota’s
• Shopping products and durable Only
goods with low replacement rates Authorized
Dealer
– High qualification
requirements for
intermediaries to
distribute, sell, service,
and support products

15 | 10
 Intensity of Market Coverage (cont’d)
• Exclusive Distribution
– Using a single outlet in a fairly large geographic
area to distribute a product
• Expensive, high-quality products purchased
infrequently
– Exclusive outlets provide an incentive to sellers in
limited markets
– Dealers carry complete inventory and have trained
staff for sales and service

15 | 11
 CHANNEL CHOICE AND
MANAGEMENT

• Factors in Choosing a Marketing

Channel
 Satisfying Buyer Requirements
• Lot Size • Variety

• Convenience • Services Backup

• Waiting time

 Reduction in number of contacts

 How a Distributor Reduces the
Number of Channel Transactions

1
2
3

4
5 A. Number of contacts
without a distributor
6 MxC=3X3=9

7
8
9

= Manufacturer = Customer
 How a Distributor Reduces the
Number of Channel Transactions

1
4 B. Number of contacts
with a distributor
MxC=3+3=6
Store
2 5

6
3

= Manufacturer = Customer = Distributor

Conventional Distribution Channel vs.
Vertical Marketing Systems
Conventional Vertical
marketing marketing
channel channel

Manufacturer Manufacturer

Wholesaler
Wholesaler

Retailer
Retailer

Consumer
Consumer
 Channel Conflict
• What types of conflict arise in channels?

• What causes channel conflict?

• What can be done to resolve conflict

situations?
 What is Channel Conflict?
• In channel distribution, conflict is not
negative, rather, some conflict actually
strengthen and improves a channel.
• “Channel conflict arises when the behavior of
a channel member is in opposition, to its
channel counterpart. It is opponent centered
and direct, in which the goal or object sought
is controlled by the counterpart.”
Coughlan, Anderson,
 Types of Channel Conflict
• Vertical Channel Conflict - conflict between different
levels within the same channel.

• Horizontal channel conflict - involves conflict between

members at the same level within the channel.

• Multichannel conflict - exists when the manufacturer

has established two or more channels that sell to the
same market.
Horizontal and Vertical Conflict in Marketing Channels
 Causes of Channel Conflict
• Goal Incompatibility

• Unclear Roles And Rights

• Differences In Perception

• Intermediaries’ Great Dependence

 Managing Channel Conflict
• Adoption of superordinate goals
• Exchange persons between channel levels
• Cooptation
• Diplomacy, mediation, arbitration for chronic
or acute conflict