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What do you think?

What does marketing channels mean? What does marketing channels do? What are the important changes in marketing channels?. What do you think?. Key Topics: Economic Rationales for Marketing Channels Functions and Flows in Marketing Channels How Would You Study Marketing Channels?

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What do you think?

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  1. What does marketing channels mean? • What does marketing channels do? • What are the important changes in • marketing channels? What do you think?

  2. Key Topics: • Economic Rationales for Marketing Channels • Functions and Flows in Marketing Channels • How Would You Study Marketing Channels? • Service Output Demand Ch. 1Marketing Channels: Structure and Functions

  3. Marketing Channels Originally defined as:Paths through which goods or materials can move from producers to users.

  4. Middleman or Intermediaries create value by reducing the spatial separation – the physical distance between the point of production and point of consumption

  5. Ch. 1 - 1Marketing Channels: Overview I. Introduction • Definition: A set of interdependent organizations involved in the process of making a product of service available for consumption or use.* • Four Types of Utility: Form, Time, Place, and Possession utility

  6. Marketing Channels Act as Exchange Facilitators We define a Marketing Channel as exchange relationships that create customer value in the acquisition, consumption, and disposition of products and services

  7. Ch 1-2The Economic Rationales for Marketing Channels • The Efficiency Rationale for Intermediaries (Figure 1-1) • The Discrepancy of Assortment and Sorting • Routinization • Searching

  8. FIGURE 1.1: CONTACT COSTS TO REACH THE MARKET WITH AND WITHOUT INTERMEDIARIES Selling Directly Manufacturers 40 Contact Lines Retailers

  9. FIGURE 1.1: CONTACT COSTS TO REACH THE MARKET WITH AND WITHOUT INTERMEDIARIES Selling Through One Wholesaler Manufacturers 14 Contact Lines Wholesaler Retailers

  10. FIGURE 1.1: CONTACT COSTS TO REACH THE MARKET WITH AND WITHOUT INTERMEDIARIES Selling Through Two Wholesalers Manufacturers Wholesalers 28 Contact Lines Retailers

  11. Manufacturers Selling Directly 40 Contact Lines Retailers Manufacturers Selling Through One Wholesaler Wholesaler Manufacturers Selling Through Two Wholesalers Wholesalers Retailers 14 Contact Lines 28 Contact Lines Retailers FIGURE 1-1: CONTACT COSTS TO REACH THE MARKET WITH AND WITHOUT INTERMEDIARIES

  12. Ch. 1-3Functions and Flows in Marketing Channels* A. Functions in Marketing Channels • Carrying Inventory • Demand generation • Physical distribution • After-sale service • Extending credit to customers B. Flows in Marketing Channels (Figure 1-2) - Physical Possession - Ownership - Promotion - Negotiation - Financing - Risking - Ordering - Payment

  13. FIGURE 1.2: MARKETING FLOWS IN CHANNELS  Physical Possession Ownership Promotion Negotiation Financing Risking Ordering Payment  Physical Possession Ownership Promotion Negotiation Financing Risking Ordering Payment  Physical Possession Ownership Promotion Negotiation Financing Risking Ordering Payment Consumers Industrial and Household Producers Wholesalers Retailers Commercial Channel Subsystem

  14. Ch 1-4How Would We Study Marketing Channel? • Marketing Channels as a Network of Systems - Interdependent and Interrelated systems - Open systems • Service Outputs as Determinants of Marketing Channel Structure - Spatial Convenience - Lot size - Waiting or delivery time - Product variety and assortment - Customer Service

  15. Ch 1-4How Would We Study Marketing Channels (Cont’d) • Marketing Cost as a Determinant ex) Transaction Cost Analysis • Cost and Benefit as Determinants ex) Governance Value Analysis • Additional Considerations: Technological, Cultural, Geographic, and Social

  16. FIGURE 1-3: FRAMEWORK FOR CHANNEL DESIGN AND IMPLEMENTATION Channel Design Process: SEGMENTATION: Recognize and respond to target customers’ service output demands Decisions About Efficient Channel Response: CHANNEL STRUCTURE: What kinds of intermediaries are in my channel? Who are they? How many of them? SPLITTING THE WORKLOAD: With what responsibilities? DEGREE OF COMMITMENT: Distribution alliance? Vertical integration/ownership? GAP ANALYSIS: What do I have to change? Channel Management Process: CHANNEL POWER: Identify sources for all channel members CHANNEL CONFLICT: Identify actual and potential sources MANAGE/DEFUSE CONFLICT: Use power sources strategically, subject to legal constraints GOAL: Channel Coordination INSIGHTS FOR SPECIFIC CHANNEL INSTITUTIONS: Retailing, Wholesaling and Logistics, Franchising

  17. Channel Design • Process: • SEGMENTATION: Chapter 2 •  • Decisions About • Efficient Channel Response: • CHANNEL STRUCTURE: • Chapter 4 • SPLITTING THE WORKLOAD: • Chapter 3 • DEGREE OF COMMITMENT: • Chapters 8, 9 • GAP ANALYSIS: • Chapter 5 Channel Management Process: CHANNEL POWER: Chapter 6 CHANNEL CONFLICT: Chapter 7 MANAGE/DEFUSE CONFLICT: Chapters 6, 7, 8, 9, 10 GOAL: Channel Coordination INSIGHTS FOR SPECIFIC CHANNEL INSTITUTIONS: Chapters 11, 12, 13 FIGURE 1-4: ORGANIZATION OF THE TEXT

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