CHANNEL ROLES IN A DYNAMIC MARKETPLACE

Teacher – Shahed Rahman

Subject – Marketing Channel

Week – 2

GAUSE’S PRINICIPLE Gause’s Priniciple of

Interspecific competition relates to channel roles

Two Protozoa Need eight resources to

survive Both struggle to survive If resources are limited –

both can survive Not enough resources – one

have to die

CHANNEL RELATIONSHIP MODEL (CRM)

It’s a complex environments where channel members operate

Channel members must fight to achieve the competitive advantage Competitive Superiority Restrictive Ranges Character Displacement

COMPETITIVE SUPERIORITY

A Channel member may emerge as a competitive superior

It can force rivals to take the exit

‘Survival of the fittest’

RESTRICTIVE RANGES

Channel member may differ across distinctive environmental conditions

Some prosper in one place while others flourish in different domains

Each member recognize its limitation in environments and choose to compete in a different environment Eg. Sears take of themsleves from financial

market and focused on retail business

CHARACTER DISPLACEMENT Channel members rapidly

evolve in diverse ways

Taking on different properties to minimize direct competition

Each corporate must continuously adapt to dynamic channel environments

CHANNEL BEHAVIORS IN COMPETITIVE ENVIRONMENTS

Consider Sears, Kmart, Wal-Mart and Radio Shack.

There stores overlap in the merchandise they sell, the customers they serve, and the areas where they operate. But to survive, each of there retailers has had to differentiate itself in important ways

INTERSPECIFIC COMPETITION IN MARKETING CHANNELS

How different business can exist in the same economic community by occupying different niches

Each business must set itself apart in some meaningful way to prosper in competitive markets eg. Some follow everyday

low pricing Some follow a

unique product line

CHANGING ENVIRONMENTS: A SHARED CONCERN

React while environments are changing to achieve its current position

In this process channel member attempt to differentiate itself from other member operating at the same level Eg: Made in USA – Focusing on

quality rather than the price by saying its better than the imported goods.

CHANNEL ROLES IN EXCHANGE SYSTEM

Supplier Relationship Customer Relationship Lateral Relationship

SUPPLIER RELATIONSHIP

Involve three principal channel roles: Source

Sources firms supply raw material Producers

Generate components parts, process materials, or finished goods

Wholesalers Market products for resale or institutional use

It was based on branded productsWholesalers are also performing sales and

marketing functions that has been assigned to producers

Take physical possession of the goods they market but they not assume ownership

WHOLESALERS CLASSIFICATION

Wholesaler Classification

Take Physical Possession

Take Title to Goods

Negotiation Function Performed

Promotional Function Performed

Merchant Wholesaler

Yes Yes Yes Yes

Manufacturer’s Sales Organization

No Yes Yes Yes

Agents /Brokers No No Yes Yes

Commission Merchants

Yes No Yes Yes

CUSTOMER RELATIONSHIP

Retailers ( Store and Nonstore) Consumers (Individual and Organizational)

Department Stores Specialty Stores Convenience Stores Discount Stores Variety Stores Supermarket

FOR A BETTER CUSTOMER RELATIONSHIP

Increase in the use of electronic shopping

Increase in the use of mail order catalog/direct mail

More manufacturer’s outlet – it’s a fashion in US economy

Hypermarket – one stop mall – self service

LATERAL RELATIONSHIP Involve partnership between firms

operating at the same channel level

Based on cooperation and trust Shared goals and work together to

improve design, quality, delivery, promotional or manufacturing

Eg- Star Alliance

KEY CHANNEL RELATIONSHIPS AND CHANNEL ROLES

Channel Relationships Channel Roles Performed withing the Relationship

Supplier Relationships Source Producers Wholesalers

Customer Relationships Retailers ( Store and nonstore)Consumers (Organizational and Individual )

Lateral Relationship Source ↔ Source Manufacture ↔ Manufacture Wholesaler ↔ WholesalerRetailer ↔ Retailer

ESTABLISHING CHANNEL ROLE IDENTITIES

Services Innovation Flexibility Timing

DISCUSSION QUESTION

Gause’s Principle of Interspecific Competition Compare the role of Wholesalers and

Retailers Role Expectation