MODULE 1

The Marketing Channels - are essentials because a businesses around the globe with conventional
marketer knows how to market a business channels.
environment by understanding the types of
The explosion of information technology and E-
marketing channels available, which lets marketers
prioritize their work. A significant part of a commerce brings forth prediction and reality. Amid
marketer's job is to know what outlets are available early expectations of high rates of disintermediation
for it, to use and use it by its prospective clients, and in the use of the Internet by manufacturers to sell
then to prioritize time, energy, and money based on directly to customers. Disintermediation
this information. Distribution Management on the eliminates intermediaries of a supply chain. The
other hand is also important since it consists of a reality now tells another story because
wide range of activities aimed at the efficient reintermediation is seen as more valuable and thus
movement of finalized products from the end of can generate more advantages and opportunities,
the production line to the consumer. especially for new intermediaries.
However, pursuing an efficient multi-channel Reintermediation is the reintroduction of an
strategy raises four main challenges that must be intermediary between a goods producer and
tackled. consumers. While disintermediation removes
elements from the supply chain, reintermediation
The following are the growing importance of
marketing channels: adds new elements to the supply chain.
Reintermediation occurs due to many issues
The explosion of information technology and E- associated with the e-commerce disintermediation
commerce
model, mostly involving issues with the direct-to-
Greater difficulty in gaining a sustainable consumer model.
competitive advantage
A GREATER DIFFICULTY IN GAINING A
The growing power of distributors, especially SUSTAINABLE COMPETITIVE ADVANTAGE
retailers in marketing channels
Sustainable competitive advantages as the
The need to reduce distribution costs following:
THE EXPLOSION OF INFORMATION TECHNOLOGY  Are company assets, attributes, or
AND E-COMMERCE
abilities that are difficult to duplicate or
The emergence of Internet-based electronic exceed; and provide a superior or
commerce toward the end of the Twentieth Century favorable long-term position over
was the seminal phenomenon that set the stage for competitors.
a host of new technologies, business models, and  A competitive advantage that rivals
innovative firms that opened a whole new world of cannot replicate quickly and easily.
possibilities for channels of distribution. It does  A sustainable competitive advantage is
appear, of course, that you can't move through the
one that endures, despite new
day without learning about the online business, the
competition coming on the market or
smartphone company, social networking, YouTube,
current competitors enhancing their own
Facebook, Twitter, Hulu, Skype, PayPal, and other
names linked to the modern era in which we reside. goods or services, is a long-term business
success.
Furthermore, the advent of e-commerce has
contributed to the emergence of a new category of
intermediaries called social media and the use of
the Internet to connect buyers and sellers. E-
commerce did not change everything, but it is now
fusing in all
THE GROWING POWER OF DISTRIBUTORS, ESPECIALLY Functions of Distribution Planning includes:
RETAILERS IN MARKETING CHANNELS
 Inventory Management
The economic power has shifted from the producers of  Warehousing Management
goods to the distributors of goods especially power  Transport Management
retailers. They play the role of ‘gatekeepers’ act as  Customer Management
buying agents for their customers rather than as
selling agents for manufacturers. MARKETING CHANNELS

Gatekeepers - people who have the power to prevent Marketing Channel - refers to the people,
sellers or information from reaching members of the organizations, and activities necessary to
transfer the ownership of goods from the point
buying center. For example, purchasing agents,
of production to the point of consumption.
receptionists, and telephone operators may prevent
salespeople from talking to users or deciders.  The external contractual organization
that management operates to achieve its
THE NEED TO REDUCE DISTRIBUTION COSTS
distribution objectives.” This definition is
In certain cases, the cost of distribution is higher than the a managerial decision-making viewpoint
manufacturing costs or the prices of raw materials and
components. Therefore, the prime target for reducing
distribution costs is marketing channels in the modern era.
The focus is on channel structure and management.

A Channel Structure - a means of reaching your customer with

your products and services. This is essentially
Channel management - a technique for selecting the most
efficient channels or routes to market for your products and
services and deriving the best results from those
 External - means that the marketing channel
channels by applying appropriate financial,
exists outside the firm. In other words, it is
marketing or training resources. not part of a firm’s internal organizational
structure.
DISTRIBUTION MANAGEMENT AND DISTRIBUTION
 Contractual - refers to those firms or parties
PLANNING
who are involved in negotiatory functions as
a product or service moves from the
Distribution Management - the management of
producer to its ultimate user. consist of
all activity’s movement and coordination of supply
buying, selling, and transferring title to
and demand in the creation of time and place utility
products or services.
in goods. > an art and science of determining
 Operates - suggests involvement by
requirements, acquiring them, distributing them,
management in the affairs of the channel.
and finally maintaining them in an operationally
This involvement may range from the initial
ready condition for their entire life.
development of channel structure all the way
Distribution Planning - is the systematic decision to day-to-day management of the channel.
making regarding the physical transfer of goods  Distribution Objectives - certain
and services from the manufacturer to the final distribution objectives are taken into
user. account. As a means of achieving this the
marketing channel exists. The structure and
 defines the important facts of physical distribution,
management of the marketing channel thus
i.e. how the products shall reach the customer.
depend in part on the distribution goals of a
company
Channel Manager - refers to anyone in a firm or organization
who is involved in marketing channel decision making.

Channel Manager Roles:

 Developing sales strategies,

 Negotiating with partners

 Training sales team

 Developing their sales team

 Size of their employer

Channel Partner - a company that partners with a

CHANNEL STRATEGY AND LOGISTICS
manufacturer or producer to market and sell the
MANAGEMENT
manufacturer's products, services, or technologies. This is
usually done through a co-branding relationship
Channel Strategy - a much broader and more
basic component than logistics management. It is a
DIFFERENCE BETWEEN CHANNEL PARTNER AND
plan for reaching customers with products and
DISTRIBUTOR?
services.

 Channel Partner = partners with a manufacturing

Channels serve two primary functions:
company, to market and sell a manufacture's
product.
 selling to the customer

 Distributor = agent who supplies goods to

 delivering customer experience including
retailers. A dealer is one who works in the
products and services themselves.
wholesale market.
The change of focus to channel strategy creates:
THE MARKETING MIX IN MARKETING STRATEGY:
PRODUCT, PRICE, PLACE, AND PROMOTION
 a competitive advantage with long-term viability,

Marketing Mix - set of controllable, tactical marketing

 builds strong relationships between
tools that a company uses to produce the desired
manufacturers and channel members
response from its target market. It consists of everything
that a company can do to influence the demand for its
 based on trust, confidence, and people power.
product.
Logistics management - more narrowly focused
The marketing management process is a strategic
on providing product availability at the appropriate
blending of 4 controllable marketing variables (marketing
times and places in the marketing channel.
mix) to meet the demands of customers to which the firm
wishes to appeal in the light of internal and external
uncontrollable variables (marketing environments).
Marketing channel strategy is considered as one of the
major strategic areas of marketing management.
Management must develop and operate its marketing
channels in such a way as to support and enhance the
other strategic variables of the marketing mix in order to
meet the demand of the firm’s target markets.
MARKETING CHANNEL FLOWS
Marketing Channel Flow - illustrate the various ties in
the distribution of goods and services between the canal
members and other agencies. Five essential flows occur
from the perspective of the channel manager.
5 CHANNEL FLOWS Channel strategy and
management involve planning for managing all of
the flows
• Logistics is concerned almost exclusively with the
management of the product flow
 Product flow - The movement of the physical product
from manufacturer through all parties who take
physical possession of the product until it reaches
the ultimate user.
 Negotiation flow – the institutions that are
associated with the actual exchange processes.
 Ownership flow – movement of title through the
channel
 Promotion flow - the flow of persuasive
communication in the form of advertising,
personal selling, sales promotion, and public
relations
Channel strategy and management
involve planning for managing all of the
flows
Logistics is concerned almost exclusively
with the management of the product flow
DISTRIBUTION THROUGH INTERMEDIARIES
Factors that determine the role of
intermediaries
 Technology > The Internet
 Economic Consideration > Specialization
and Division Labor
Specialization and Division of labor > Distribution Task
= Distributed Interorganizational- occurring between
or involving two or more organizations
Specialization and Division of labor > Production Task
= Distributed Intraorganizational - occurring within
an organization