Relationship Marketing And

Marketing Channels…..
 What is relationship
marketing?
• Marketing designed to create,
maintain, and enhance strong
relationships with customers and
other stakeholders.

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 Why is it important?
• It costs five times as much to attract a
new customer as it does to keep a
current one satisfied.
• It is claimed that a 5% improvement in
customer retention can cause an increase
in profitability of between 25 and 85
percent depending on the industry.

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 • Likewise, it is easier to deliver
additional products and services to an
existing customer than to a first-time
“buyer.”

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 Stages in the development
of a Customer Relationship

•The Pre-relationship Stage

The event that triggers a buyer to
seek a new business partner.
•The Early Stage
Experience is accumulated between
the buyer and seller although a great
degree of uncertainty and distance exists.
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 •The Development Stage
Increased levels of transactions lead
to a higher degree of commitment and
the distance is reduced to a social
exchange.

•The Long-term Stage

Characterised by the companies’
mutual importance to each other.

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 •The Final Stage
The interaction between the
companies becomes institutionalized.

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 Managing Customer
Relationships
Developing the relationship

•Select an appropriate offering;

•Customise the relationship;

•Link the solutions with the customer’s

needs

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 •Discuss customer concerns;

•Summarize the solution to confirm

benefits; and

•Secure commitment.

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 Conclusion
• Relationship marketing is one of the most time-consuming
but effective strategies for marketing Extension programs.
Relationship marketing is a process, not a one-time event;
clientele must understand that you are committed long-term
and that they can depend on you to provide education.
To be effective, you must establish a relationship
with the audience you are targeting by making a connection
with them over time. In order to build a relationship, as
with any other relationship in life, Extension needs to be
constantly in touch with its audiences. By making a
connection with diverse audiences, Extension can build
strong community networks that promote the programs we
market beyond the limited scope of small workshops and
community meetings.

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 Marketing Channels…..

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 Marketing Channels…
• Often the question comes up, what is a channel?  A
channel to market is the method of getting your
product into the customer’s hand. This can either be
through direct sales, or through a reseller. Direct sales
can occur in person, via the phone, the web or mail.
Indirect, or channel sales typically refers to sales
through a reseller. A reseller can order from you
direct or from a wholesale distributor--you would sell
to a wholesale distributor and they in turn would sell
to multiple resellers (two tiers between you and the
end user

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 Which Channel to Use?

• The first question to address is whether you

should go direct or indirect. Often the answer
is both--especially since the popularity of the
Internet. The key, however is to avoid most of
the channel conflict.  
For example, you might go direct with
massive deals that are too big for a reseller to
finance or very small deals that don’t require
any special training/installation/consulting.

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• To minimize conflict you could:
Segment the products (different products are
sold through different reseller types or
channels)
Setup exclusive or limited territories
Sell direct at a higher price than the average
street price
Setup different promotions for different
resellers--rotating so they all have advantages
at different times
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 Consumer Channels
PRODUCERS OF CONSUMER GOODS

Agents Agents

Merchant Merchant
wholesalers wholesalers

Retailers Retailers Retailers Retailers

ULTIMATE CONSUMERS

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 Types of Marketing Channels

A. Conventional Channel or Non-

Integrated Channel

B.  Integrated Channel or Non

conventional channels

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 Conventional Channel or Non-
Integrated Channel
• According to Kotler and Armstrong (2001),
a conventional distribution channel is a
channel consisting of one or
more independent producers, wholesalers, and
retailers, each a separate business seeking to
maximize its own profits
even at the expense of profits for the system as
a whole.

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 1. Manufacturer to Consumer
• In this channel there is no intermediary.
Manufacturer makes the goods and
directly distributes to consumers.

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 2. Manufacturer to Retailer to
Consumer 

• Retailer is the intermediary between

manufacturer and consumer. He
purchases goods from manufacturer and
sells to consumer.

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 3. Manufacturer to Wholesaler to
Retailer to Consumer 
• In this channel, there are two option, one
is wholesaler and other is retailer.
Wholesaler buys large scale and sells to
retailer and the retailer sells to consumer. 

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 4. Manufacturer to Wholesaler to
Consumer
• Consumer can buy easily and directly
from wholesaler. So, in this channel there
is only one intermediary and he is
wholesaler. 

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 B.  Integrated Channel or Non
conventional channels
• Integrated channel are modern
channel for distribution of goods.
These channel can be divided into
two parts :

 Vertical Channel
 Horizontal Channel

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 1. Vertical Channel
• Vertical channel is that corporate channel
which are useful for the flow of products
which are capital nature. In this, if one
company contracts with other
manufacturers who will convert the
capital product into most usable shape
and sell it to the dealers. Then it will be
vertical channel.
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 2. Horizontal Channel
• Two companies join together for
marketing of any product for reducing
competition and excess capacity.

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 Factors Affecting Choice of Di
stribution Channel-
 Sizes & weight  of the product – If
the size, weight & price of the product is
very large, then direct supply should be
there as it will lead to convenience &
low  transportation cost & there will be
less chances of damage during
transportation. For eg. Big industrial
products like boilers, grinders etc.
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     Unit Value – If the per unit value of
product is less, say for eg. salt, sugar, wheat,
rice etc. then the distribution channel may be
large as consumption of it is comparatively
more. But, if the unit price is very high, for
eg. gold, silver, then a smaller distribution
channel is required.

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 Technical nature of product – If the product
is of technical nature then an effective after sales
service is also to be provided. So, in this case,
either direct marketing or marketing through
authorized dealer should be used, on only then
company can use the services of its services-
engineers more effectively. For eg., in case of
electronic item TV’s and Refrigerators, outlet is
authorized dealers, so if after sales service is
required customers may contact the dealer, which
passes it to the company for final service.

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 • Stability of the product – If the product is of
perishable in nature, i.e. it becomes useless
after a specific period of time, like milk,
butter, cheese, fish, etc. then  a small
distribution channel is required to ensure
prompt delivery, but if the product is stable in
nature like soaps, shampoo etc, then the
distribution channel can be long.

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  Expert of product line – The manufacturer
has to decide that he should take the services
of a wholesaler or retailers or both and then
accordingly decide to increase or decrease the
product line. For eg., if the manufacturer is
manufacturing soaps, then he can increase the
product line by incorporating shampoos also,
as the distribution channel will be the same.

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 The Company’s Financial Position: A
company with a strong financial
background can develop its own
channel structure. A financially strong
company opts a direct channel and
employment of agent middleman than
merchant middleman.

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