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Market Channels and Value Networks. Arild Aspelund IØT, NTNU. Outline. What are Market Channels? What does a market channel look like and how can you design and manage it for your purposes Some typical examples of problems and conflict in market channel management Value Networks.
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Market Channels and Value Networks Arild Aspelund IØT, NTNU
Outline • What are Market Channels? • What does a market channel look like and how can you design and manage it for your purposes • Some typical examples of problems and conflict in market channel management • Value Networks
Sets of interdependent organizations involved in the process of making a product or service available for use or consumption. Market Channels
What Shall a Market Channel Deliver? • Information about buyer needs and behavior • Market research, sales information, contacts, competitive behavior, price sensitivity • Information to potential buyers about market offer • Attention, communication, promotion and branding, customization, and price negotiation • Physical distribution • Physical flow at customer convenience • Financing • Payment, risk-taking • Maintenance and control of exchange process • Service, repair, rebuy
A Market Channel Needs to Be a Suitable Carrier of Your Marketing Mix The four P’s • Product • Price • Place • Promotion The four C’s • Customer solution • Customer cost • Convenience • Communication
…and with the multiple tasks it tends to become rather complex…
Analyze customer needs Establish channel objectives Identify major channel alternatives Evaluate major channel alternatives Designing a Market Channel
Channel Management Decisions • Selecting channel members • To customers, the channel is the company.. • Training channel members • Reduce variation of offers and services • Motivation channel members • Do you have the power to change the channel’s behavior? • Evaluating channel members • Goal achievements and growth opportunities • Modifying channel arrangements • Life-cycle perspectives and simply change a loosing team
Channel Integration and Systems • Vertical Marketing Systems (VMS) • Corporate VMS • Administered VMS • Contractual VMS • Horizontal Marketing Systems • Multi-channel Marketing Systems
Typical Market Channel Problems • Principal – agent issues • Information asymmetry • Moral hazard • Resource dependence • What if your channel is far bigger than you…? • Make others dependent on you, but never depend on others… • Channel conflicts • Can you prioritize channels? • What if you decide to establish new channels, and your old ones don’t agree?
E-commerce Channel Conflicts • Pure-click • Brick-and-click • Brick-and-mortar
What are Value Networks • Some argue that the market channel scope is insufficient to explain the behavior and decision-making of a value chain • They conceptualize the company as the center of a value network • Value Network – a system of partnerships and alliances that a firm creates to source, augment, and deliver its offerings • The value network includes suppliers, sub-suppliers, customers, end-users and all governmental and facilitation organizations • Lifts the focus of the company out of the market channels which is has direct control
Summary and continuation • Summary • Defined what you want from a marketing channel and how you can design them for your own purposes • Some typical market channels and their characteristics • Review of some of the major challenges of market channel management • Considered some perspectives of value networks • Continuation • Market communication