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Maximizing Online Sales Channels: Strategies and Impact on Marketing Mix

Explore the impact of electronic marketing channels on distribution, the role of the Internet in leveling the playing field, and the importance of channel design and management in a multichannel strategy. Learn about the complexities of channel member selection, challenges of channel management, and criteria for evaluating performance.

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Maximizing Online Sales Channels: Strategies and Impact on Marketing Mix

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  1. Part 4 Additional Perspectives on Marketing Channels

  2. Chapter 15 Electronic Marketing Channels

  3. Electronic Marketing Channels Objective 1: 15 Computers Technology Internet Impact on Design & Management of Marketing Channels

  4. Electronic Marketing Channels Objectives 2 & 3: 15 Not physical availability Web-TV, PDAs The use of the Internet to make products & services availableso that the target market with access to computers or other enabling technologies can shop & complete the transaction for purchase via interactive electronic means Actually purchasing products through the use of PCs, Web-TV, PDAs

  5. Structure of ElectronicMarketing Channels 15 Disintermediation versus reintermediation Information flow versus product flow Virtual channel structure versus physical channel structure Three Key Phenomena

  6. Disintermediation andReintermediation Objective 4: 15 Disintermediation Reintermediation Shifting, changing, or adding middlemen to the channel Intermediaries become superfluous because producers gain exposure to vast numbers of customers in cyberspace Amazon.com Auto-By-Tel Corp. Peapod, Inc. Dell Computer Corp.

  7. Disintermediation versusReintermediation No matter how technologically sophisticated the Internet becomes or how much it is hyped, the laws of economics as they relate to channel structure do not change. 15 Efficiency in the performance of distribution tasks is what ultimately determines what form channel structure will take. = The Internet has not eliminated middlemen, or caused total disintermediation.

  8. Internet Limits Objective 5: 15 Product Flow • Cannot be digitized • Processed slowly, often by people • Is basis for all other flows—negotiation, ownership, information, & promotion

  9. Developments & Trends Objective 6: 15 • Online shopping to $36 billion from mid-1990s to the end of 2002 • Online shopping has become a routine shopping choice • PCs, peripherals, software, & books accounted for a significant portion of total retail spending on these products Electronic Marketing Channels

  10. Profile of Online Shoppers 15 • Age range of 25 to 54 • Income level range $35,000 to about $99,999 • College graduates & those with postgraduate education make up 54% • Professional/managerial occupations make up 32% Highest Percentages

  11. 15 Future of Online Shopping Online Sales as a Percentage of Total Retail Sales, 1999–2002

  12. Advantages & Disadvantages Objective 7: 15 Advantages of Electronic Marketing Channels Global scope & reach Convenience/rapid transaction processing Information processing efficiency & flexibility Data-based management & relationship capabilities Lower sales & distribution costs

  13. Advantages & Disadvantages 15 Disadvantages of Electronic Marketing Channels Lack of contact with actual products & delayed possession 2. Fulfillment logistics not at Internet speed or efficiency Clutter, confusion, & cumbersomeness of Internet Nonpurchase motives for shopping not addressed Security concerns of customers

  14. Objective 8: 15 Implications • Objectives & strategies of the firm & electronic marketing channels • Role of electronic marketing channels in the marketing mix • Channel design & electronic marketing channels • Channel member selection & electronic marketing channels • Channel management & electronic marketing channels • Evaluation & electronic marketing channels

  15. Objectives & Strategies of the Firm 15 Role of distribution more complex because of electronic marketing channels = Channel manager must consider whether Internet-based channels fundamentally affect the firm’s decision about the priority given to distribution

  16. The Marketing Mix 15 The Internet arms large numbers of customers with more information about products & services to level the playing field The fourth P, place (distribution), may assume a larger role relative to the other three variables for more & more firms

  17. Channel Design 15 The channel manager of retailers, industrial, and B2B markets should provide “channel-surfing” consumers with whatever channels or combinations of channels they desire = A facet of the development of an effective multichannel marketing strategy

  18. Channel Member Selection 15 Complexity grows as channel member selection may include the need to avoid conflict with conventional channel members = The need to select members carefully

  19. Channel Management 15 Multichannel challenge of conventional and electronic channels = The fundamental issues of motivating channel members, building cooperation, managing conflict, & coordinating elements of the marketing mix requires manager’s full attention

  20. Evaluation 15 Likely to change Unlikely to change Specific criteria for Performance expectations, performing evaluations & criteria, & measurement of technological means for how well they are being met doing so by channel members

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