MARKETING MANAGEMENT12th edition

15 Designing and

ManagingValue Networks and

Channels

Kotler Keller

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Chapter Questions

• What is a marketing channel system and value network?

• What work do marketing channels perform?• How should channels be designed?• What decisions do companies face in

managing their channels?• How should companies integrate channels

and manage channel conflict?• What is the future for e-commerce?

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Marketing Channels

Sets of interdependent organizationsinvolved in the process of making a product or service available for use

or consumption.

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Channels and Marketing Decisions

Push

Strategy

Pull

Strategy

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Categories of Buyers

Habitual shoppers

High value deal seekers

Variety-loving shoppers

High-involvement shoppers

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Buyer Expectations for Channel Integration

• Ability to order a product online and pick it up at a convenient retail location

• Ability to return an online-ordered product to a nearby store

• Right to receive discounts based on total online and offline purchases

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Should the 4 P’s be replaced?

• Solutions

• Information

• Value

• Access

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Figure 15.1 Increasing Efficiency

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Channel Member Functions

• Gather information• Develop and disseminate persuasive

communications• Reach agreements on price and terms• Acquire funds to finance inventories• Assume risks• Provide for storage• Provide for buyers’ payment of their bills• Oversee actual transfer of ownership

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Figure 15.2 Marketing Channel Flows

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Figure 15.3 Consumer Marketing Channels

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Figure 15.3 Industrial Marketing Channels

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Designing a Marketing Channel System

Analyze customer needs

Evaluate major channel alternatives

Identify major channel alternatives

Establish channel objectives

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Channel Service Outputs

Lot size

Waiting/delivery time

Spatial convenience

Product variety

Service backup

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Identifying Channel Alternatives

Types of

intermediaries

Number of

intermediaries

Terms and

responsibilities

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Number of Intermediaries

Exclusive

Selective

Intensive

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Figure 15.4 The Value-Adds Versus Costs of Different Channels

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Figure 15.5 Break-Even Chart for the Choice Between A Company Sales Force and Manufacturer’s Sales Agency

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Channel-Management Decisions

Selecting channel members

Training channel members

Motivating channel members

Evaluating channel members

Modifying channel members

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Channel Power

• Coercive

• Reward

• Legitimate

• Expert

• Referent

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Channel Integration and Systems

Vertical marketing systems

• Corporate VMS• Administered VMS• Contractual VMSHorizontal marketing

systemsMultichannel systems

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Figure 15.6 The Hybrid Grid

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Managing Channel Conflict

• Adoption of superordinate goals

• Cooptation• Diplomacy• Mediation• Arbitration

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e-Commerce Marketing Practices

• Pure-click• Brick-and-click• Brick-and-mortar

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Marketing Debate

Does it matter where you are sold?

Take a position:1. Channel images do not really affectthe brand images of the products theythey sell that much.2. Channel images must be consistent withthe brand image.

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Marketing Discussion

Think of your favorite retailers. How have they integrated their

channel system? How would youlike their channels to be integrated?

Do you use multiple channelsfrom them? Why?