Lecture 8: Marketing Channels: Delivering Customer Value

Question 1

What are Marketing Channels?

Answer 1

• A set of independent organisations that help make products or services available for use by consumers or business users
• Company making its products available through…
  
  • Apple (own stores), courts (retailers), Lazada (online)

Physical distribution firm (movement of goods from sellers to buyers)

Reseller (buys products and sells them to customers)

Marketing Agency (focuses on promotions, advertising, and branding)

Financial Intermediary (banks, payment gateways, and investment firms that handle financial transactions)

Question 2

How Channel Members Add Value

Answer 2

Helping to Complete Transactions
1) Information
Collecting and sharing market data (e.g., Watsons helping Unilever launch TRESemmé in China)

2) Promotion
Using customer insights to create effective marketing campaigns (e.g., Watsons leveraging social media for TRESemmé)

3) Contact
Engaging with potential customers (e.g., Watsons targeting 300k loyalty members via SMS)

4) Inventory Management
Aligning stock levels with demand to ensure product availability

5) Negotiation
Agreeing on pricing and terms to facilitate ownership transfer

Helping to Fulfil Transactions
1) Physical Distribution
Storing and transporting goods (e.g., Ninja Van delivering for Love Bonito)

2) Financing
Providing financial support (e.g., banks offering 0% installment plans for iPhone purchases)

3) Risk Taking
Bearing financial risks (e.g., Watsons discounting near-expiry products at a loss)

Question 3

Marketing channel levels

Answer 3

Channel 1 (Direct Marketing Channels) – No intermediaries; producer sells directly to:
Consumers or Business customers

Channel 2 (One-Level Indirect Channels) – One intermediary between producer and end user:
Retailer for consumers (e.g., supermarkets)
Business distributor for business customers

Channel 3 (Two-Level Indirect Channels) – Two intermediaries:
Producer -> Wholesaler → Retailer → Consumer
Producer -> Manufacturer’s representative → Business distributor → Business customer

Question 4

Distribution system

Answer 4

Multichannel Distribution – A firm uses multiple marketing channels to reach different customer segments

Omnichannel Distribution – A firm integrates multiple touchpoints (e.g., mobile, desktop) to provide a seamless, customer-centric experience by leveraging data from all interactions

Multichannel = Multiple separate sales channels (e.g., online store + retail stores, but not necessarily connected)

Omnichannel = Integrated experience where all channels work together (e.g., browsing online, purchasing via mobile, picking up in-store)

Question 5

Channel design decisions

Answer 5

Analyzing Consumer Needs
Understanding customer preferences for convenience, product variety, speed, service quality, and other factors

Setting Channel Objectives & Constraints Identifying target segments, best channels, and considering company and competitor factors

Identifying Major Alternatives
Choosing between intensive, selective, or exclusive distribution, deciding on types and number of intermediaries, and defining their responsibilities

Evaluating Alternatives
Assessing options based on economic feasibility, control, and adaptability

Question 6

Channel management decisions

Answer 6

Selecting
Choose channel members based on experience, profitability, product lines, reputation, and cooperation

Motivating
Encourage performance through joint advertising, promotions, incentives, training, and remuneration schemes

Evaluating
Assess members based on sales performance, growth potential, and customer service quality

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