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Marketing Channel Structure and Functions
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Transcript of Marketing Channel Structure and Functions
Marketing Channel Structure
and Functions
Overview
Outline
• Overview
• Primary Function of Channel Members
• How Channel Member add Value
• Consumer Channels Vs Business Channels
• Multi Channel Distribution
• Distribution System Selection
• Carefully Select Channel Members
• Building International Distribution
• Future Direction of Distribution
• Summary
Overview
• Business channel management - is the
process of designing a set of marketing
and distribution arrangements that fulfill
the requirements and preferences of
targeted market segments and
customers, creating value through direct
sales force and logistics systems, and
constructing offerings for channel
members that build marketplace equity.
What is a Marketing Channel?
A marketing channel is a a set of interdependent
organisations involved in the process of making a
product or service available for use or
consumption.
Primary Functions of Channel Members
• to be a stockist of your product
• to represent your brand in the market place
• to gather marketing intelligence
• to assume risk
• to deliver product and offer post sales support
• to add value to the sale
How Channel Members Add Value
Primary Questions
1. Which intermediary, or intermediary combination, is best suited for to take a new product or service to market?
2. How should the intermediary network be managed once it is up and running?
Production Distribution
Tasks
Thickening the woodShaping body and neckGluing and clamping partsSanding and assemblyApplying finishInstalling electric componentsAttaching machine heads & stringsAdjusting action and pickup
Tasks
BuyingSellingTransferring the titleTransportationStorageProcessing ordersProviding informationAfter sales customer service
Specialisation and Division of Labour Principle-Fender Guitars
Production Distribution
Production
tasks allocated
to workers
specializing
in performing
those
tasks
Result? Production Efficiency Result? Distribution Efficiency
Worker
Worker
Worker
Worker
Distribution
tasks allocated
to intermediaries
specializing
in performing
those
tasks
Manufacturer
Retailers
Consumers
Wholesalers
Agents
Specialisation and Division of Labour Principle- Fender Guitars
Consumer Marketing Channels
Business Marketing Channels
Multi Channel Distribution System
Distribution System Selection
• Marketing Managers select the most feasible
marketing channels that effectively perform the
business processes and functions needed to
correct the targeted gaps in service outputs.
• Hybrid Channels, Multiple Channels and
Shorter Channels or Direct Channels.
Figure 1 : Channel Selection: Traditional View
Manufacturer
Wholesaler Own sales force or reps Wholesaler
Dealer
Customer
� � �
Figure 2 : Hybrid Channel
Customer
Own sales
force
Outside
distributor
Inside or Outside
service specialists
Supplier
Demand
generationPhysical
distribution
After -sales
service
Figure 3 : The Free – Riding Problem
Distributor
Customer
Supplier A Supplier B
Demand generation
functions Demand fulfillment
functions
Full function
distributor
Figure 4 : Multiple Channels
No frills/Low cost channel
Seller
Full service/Full cost channel
Price
sensitive
customers
Customers who wear
different hats on different
purchase occasions
Service
sensitive
customers
Figure 5 : Multiple Channel Conflict
Full product line
X and Z
Seller
Limited product line
X
Mainly Z Customers Mainly X Customers
ΑΑΑΑ B
Figure 6 : The role of master distributors
Seller
Building Trade and
Do-it yourself (DIY) customers
Retail distributors
Bunnings Hardware
HouseDealer
Master distributor
Carefully Select Channel Members
• Specify channel capabilities the supplier seeks
in terms of:
� Technical competence
� Sales force deployment
� Warehouse and delivery capabilities
� Financial stability
� Leadership
Build International Marketing Channels
• Firms operating overseas should anticipate
longer business processes and additional
functions in the marketing channels.
• They must cover additional geography
• Adhere to export and import regulations of each
country market as well as local culture and
distribution practices
Future Direction of Distribution …..
• Proliferation of information
technology.
• Polarisaton of customers
(consolidation on one hand and
fragmentation on the other).
• Manufacturing operations that can
mass customise.
• Quick shipment distribution logistics.
Summary
• Regardless of structural form, distribution
channels in the future will be more
interactive with the customer.
• The internet will continue to challenge
traditional channels.
• International channels of distribution are
important
• Channel Management is about being
adaptive to where the customer prefers to
buy.
You are welcome to contact Nigel Bairstow at B2B
Whiteboard your source of B2B Asia / Pacific
marketing advice
http://www.linkedin.com/pub/nigel-bairstow/6/41b/726
http://twitter.com/#!/b2bwhiteboard