Chapter 10: Marketing Channels — Delivering Customer Value Flashcards
Marketing channels represent which side of the value delivery network?
The downstream side.
What are distributors’ roles in the marketing environment?
They reduce the number of channel transactions and make it more efficient. (3+3 = 6 rather than 3x3 = 9)
How do channel members add value?
They add value by providing more contacts, specialization, and scale of operation.
What are the two types of marketing channels?
1) Direct marketing channels - no intermediaries
2) Indirect marketing channels - one or more intermediaries
When will marketing channels be most effective?
When each member is assigned tasks it can do best and when all members cooperate.
What are the two types of conflicts in a multimarketing channel?
1) Horizontal conflict - same level e.g. retailer to retailer
2) Vertical conflict - different levels e.g. wholesales to retailer
What is the ongoing trend for marketing channels?
Disintermediation - when product and services providers cut out traditional intermediaries e.g. Marriot - Agoda (failed)
Elaborate on the channel design objectives.
Firms need to consider these four when designing channels:
1) Analyzing consumer needs - must balance needs against costs and consumer price preferences
2) Setting channel objectives - targeted levels of customer service; influenced by cost, nature of the company, firm’s products, marketing intermediaries, competitors, and environment
3) Identifying major alternatives - includes
a) type of intermediaries: company sales force, manufacturer’s agency, or industrial distributors
b) # of marketing intermediaries: intensive, selective, or exclusive distribution
c) responsibilities of channel members
4) Evaluating alternatives - in terms of
a) economic criteria: compares likely sales, costs, and profitability
b) control issues: how and to whom should control be given?
c) adaptive criteria: long-term channel commitment vs channel flexibility
Explain why companies use marketing channels and discuss the functions these channels perform.
Companies use marketing channels to improve the efficiency in delivering value to customers. Marketing channels add value to products by having more contacts, being more specialized, and having a larger scale of operation.
Discuss how channel members interact and how they organize to perform the work of the channel.
Channel members interact within the same channel with each other who are upstream or downstream members.
In addition, companies can have multiple channels (AKA hybrid/multi marketing channel), but a problem arises in that channel members can conflict with each other. To eliminate the conflict, we must organize them into what they do best, and motivate them to cooperate.
To add, a growing trend these days is that firms are going through “disintermediation,” the process by which companies remove traditional intermediaries.
Identify the major channel alternatives open to a company.
Major channel alternatives include
1) type of intermediaries: company’s sales force, manufacturer’s agency, industrial distributors
2) # of intermediaries: intensive, selective, exclusive distribution
3) responsibilities of channel members: what role do they perform
Identify the major channel alternatives open to a company.
Major channel alternatives include
1) type of intermediaries: company’s sales force, manufacturer’s agency, industrial distributors
2) # of intermediaries: intensive, selective, exclusive distribution
3) responsibilities of channel members: what role do they perform
Explain ho companies select, motivate, and evaluate channel members.
They do so by considering alternatives on three bases:
1) Economic criteria - consider the likely sales, costs, and profitability of each channel
2) Control issues - consider how and to whom should control be given to
3) Adaptive criteria - consider long-term commitment vs channel flexibility
Discuss the nature and importance of marketing logistics and supply chain management.
The nature is that they perform the role of delivering supplies from the suppliers to the manufacturer. The importance is that supplies are what is directly related to a product’s value, which in turn relates to customer satisfaction. If a problem occurs in these systems, customer satisfaction would ultimately be affected.
