ST.

JOHN’S
UNIVERSITY

W3B

Chapter 17

Designing and Managing Integrated

Marketing Channels

Instructor
Dr. Nicos Antoniades

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The Importance of Channels

A marketing channel system is the particular set

of marketing channels a firm employs, and
decisions about it are among the most critical
ones.
One of the chief roles of marketing channels is to
convert potential buyers into profitable
customers.
Marketing channels must not just serve markets,
they must also make them.
The channels chosen affect all other marketing
decisions.

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Adding more channels gives companies three
important benefits:
1) Increased market coverage.

2) Lower channel cost (selling online or by

catalog and phone is cheaper than using
personal selling to reach small customers).

3) The ability to do more customized selling

(such as by adding a technical sales force to
sell complex equipment, i.e., a car, a
bicycle, a scissor, etc.).

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The Digital Channels Revolution

With customers - both individuals and

businesses-becoming more comfortable buying
online and the use of smart phones exploding,
traditional channel strategies are being
modified/replaced.
Online retail sales (or e-commerce) have been
growing at a double-digit rate; apparel and
accessories, consumer electronics, and computer
hardware are the three fastest-growing categories.

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Customers expect seamless channel
integration so they can:
- Enjoy helpful customer support in a store,
online, or on the phone.
- Check online for product availability at local
stores before making a trip.
- Find out in-store whether a product that is
unavailable can be purchased and shipped
from another store to home.
- Order a product online and pick it up at a
convenient retail location.
- Return a product purchased online to a
nearby store of the retailer.
- Receive discounts and promotional offers
based on total online and offline purchases.

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The Role of Marketing Channels

Channel Functions and Flows

A marketing channel performs the work of

moving goods from producers to consumers.
It overcomes the time, place, and possession gaps
that separate goods and services from those who
need or want them.

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Members of the marketing channel perform a
number of key functions:
- Gather information about customers,
competitors, etc.
- Develop persuasive communications.
- Negotiate and reach agreements on price, etc.
- Place orders with manufacturers.
- Provide for buyers’ payment of their bills
through banks and other financial institutions.
- Etc.

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Channel-Design Decisions

To design a marketing channel system,

marketers:
- Analyze customer needs and wants.

- Establish channel objectives and constraints.

- Identify and evaluate major channel

alternatives.

Channel-Management Decisions

After a company has chosen a channel system, it

must select, train, motivate, and evaluate
intermediaries for each channel.

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Legal and Ethical Issues in Channel Relations

Companies are generally free to develop

whatever channel arrangements suit them.
The law seeks to prevent only exclusionary
tactics that might keep competitors from using a
channel.
Here we briefly consider the legality of certain
practices, including exclusive dealing, exclusive
territories, tying agreements, and dealers’ rights.

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 ST. JOHN’S
UNIVERSITY

Chapter 18

Managing Retailing, Wholesaling, and

Logistics

Instructor
Dr. Nicos Antoniades

10
Retailing
Retailing includes all the activities in selling
goods or services directly to final consumers for
personal, nonbusiness use.
Retailers can be:
- Store Retailers
- Nonstore retailers
- Retail organizations
The major types of retail stores:
- Specialty stores
- Department stores
- Supermarkets
- Convenience stores
- Discount stores
- Off-price retailers
- Superstores
- Catalog showrooms

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Nonstore retailing is growing and includes:

Direct selling (one-to-one selling, one-to-

many party selling, and multilevel network
marketing).
Direct marketing (which includes e-
commerce and Internet retailing), automatic
vending, and buying services.
Retail organizations achieve many economies of
scale, greater purchasing power, wider brand
recognition, and better-trained employees.
The major types of corporate retailing:
- Corporate chain stores
- Retailer cooperatives
- Consumer cooperatives
- Franchise organizations
- Etc.
Like all marketers, retailers must prepare
marketing plans that include a 4Ps Strategy!

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Wholesaling

It includes all the activities in selling goods or

services to those who buy for resale or business
use.
Wholesalers can perform functions better and
more cost-effectively than the manufacturer can.
These functions include:

- Selling and promoting

- Warehousing
- Transportation
- Financing
- Risk bearing
- Dissemination of market information
- Provision of management services and
consulting
- Etc.
Like retailers, wholesalers must decide on
their 4Ps Strategy!

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 Week 3B - Discussion - Exercise

(Please go to Canvas/Discussions to answer)

IKEA’s CEO asked you (the marketing manager) to build

an online Marketing Strategy on a new product that is about
to enter the market (a new recliner chair with an automatic
disinfection machine).

Following Walmart’s example (please read below), what

factors would you consider building your strategy?

Support your answer (+-200 words) and comment on at

least one of your classmates’ posts.

REMEMBER: Every time you participate in the weekly

Discussions (Canvas), you earn two points on your overall
grade (Syllabus).

IMPORTANT: NO EXTENSION CAN BE GIVEN

FOR THIS DISCUSSION!

This Discussion will close on Sunday, November 5th, at

11.59 pm (EST).

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Walmart
With a huge investment in brick-and-mortar stores, many
entrenched executives, and long-established policies, Walmart
was slow to embrace online and mobile technology and had online
operations accounting for less than 2% of its global sales. Then
the company decided to make its digital strategy a priority, giving
customers anytime, anywhere access to Walmart by combining
mobile, online, and physical stores. After acquiring social-media
start-up Kosmix, known for its strong expertise in search and
analytics, it established its @WalmartLabs group in Silicon
Valley, leading to company innovations such as smart-phone
payment technology, mobile shopping applications, and Twitter-
influenced product selection for stores. Walmart found that many
of its core customer groups who made $30,000 to $60,000 a year
were shopping from its Web site in large numbers and often on
smartphones rather than computers. Always a wizard with
logistics, Walmart adopted a “ship from store” practice that uses
its more than 4,000 U.S. stores as warehouses to fulfill online
orders quickly. The company is also exploring same-day shipping.
It improved the search engine on its Web site, increasing its
“browsers to buyers” conversion by as much as 15%; launched its
Shopycat gift recommendation app, which uses social media to
suggest gifts; introduced its Scan and Go app so customers can
automatically apply coupons when checking out; and added an in-
aisle mobile-scanning system to speed check-out. A top priority
for Walmart is its smartphone app. Users of the app spend more
and frequent the store twice as often as non-users. When near a
store, the app flips into “store mode” to help locate items on a
shopping list and make additional recommendations, provide a
digital version of the latest circulars, and highlight new products
available in the store.

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