The choice and design of a marketing channel have to take into account such service requirements. ii. 5. Service support required by buyers may vary from product to product and market to market. Intermediaries stand between the producers and final buyers in indirect channels. Conflict. It’s essential to employ a digital marketing strategy to work in concert with your other promotions (such as brochures and live events). Wholesale volume is greater than that of retail because it includes sales to industrial users as well as merchandise sold to retailers for resale. Designing the marketing channels is a task in which the manufacturer has to take into consideration several factors. will take immense effort from the customer. The channel system of an organisation evolves in response to local opportunities and conditions. This is also known as a direct marketing channel. This may be achieved by themselves or by creating an independent unit, for example, Sugar Syndicate of India, Associated Cement Company, etc. (a) Manufacturers – Agents or Brokers – Retailer – Consumer – 2 Levels. This requires six contacts. Wholesalers can provide warehousing, inventory control and order processing, transportation, information, and selling functions. 2. In Japan, food distribution may involve as many as six levels. Distribution intensity plays a significant role in marketing channel strategy. On the other hand, frequently used and ‘low margin’ items like cigarettes have a long chain of middlemen before they reach the ultimate consumers. This activity contains 16 questions. So let's take first, the first stage of being demand generation; who's going to generate demand? Recent advancements in the field of electronics is bringing a lot of changes in the way business is conducted. Channel Choice: Managers have many factors to consider when choosing a product distribution channel. This is developed in such a manner that the co-ordination of marketing activities is achieved by using the programs of one or few firms. For instance, if you have a large email list, you can use that to promote your Facebook page. Considering the vastness of the internet, however, being found by consumers who are not yet aware of your product becomes difficult. An individual firm's success depends not only on how well it performs but also on how well its entire marketing channels compete with competitor channels. Channel selection refers to selecting individual channel members. Take the example of a pain reliever like Aspirin. Conflicts can be functional or dysfunctional. (c) Manufacturer – Manufacturers’ Agents – Consumers – 1 Level, (d) Manufacturer – Large retailer/consumer cooperatives – Consumer – 1 Level. Vertical Marketing Systems (VMS) represent a major step towards resolving dysfunctional conflict. 1. Order lot size – If the average order lot size is smaller, transportation costs increase. This is the most popular choice and is used by both small and big companies alike. Marketing Channel Design 8. Convenience goods such as salt, sugar, cookies, etc., are good examples of products suitable for this type of distribution. Although many retailers prefer to buy directly from the manufacturers, this is not always the case. 4. Trade channels are classified as conventional and non-conventional with further divisions. Marketing channel intensity takes into account both the variance and number of channels an organization may use to deliver goods and services to consumers. One has to take into account government regulations while deciding on the marketing channels. Cues to reach the goal may be situational (available at that point of time and place) or in memory (residing in memory). e. More than three levels – In some cases, one can observe longer marketing channels, that is, channels that have more than three intermediaries. For example, Automative tyres. This works well for institutional consumers such as colleges, hospitals, schools clubs, government agencies, business houses, religious institutions etc. Channel Co-Operation, Conflict and Competition: Marketing channels involve a number of channel intermediaries, and this is always likely to result in a conflict of interests. The Fig. The route that the product takes on its way from production to the consumer is important because a marketer must decide which route or channel is best for his particular product. Non-store Retailing – Non-store retailing describes sales made to ultimate consumers outside of a traditional retail store setting. Here, the manufacturer sells directly to the customer. However, some service providers may take help of agents who can provide the information to the customers, book the orders, and collect the payment on behalf of the service providers. When Vicks cough drops were distributed through chemists’ shops, Warner Hindustan launched another form of lozenges called Halls, and distributed it through all categories of retail outlets, down to cigarette vendors on railway platforms. 1. You'll also see that once you have one channel built, you can use that to build more. To motivate channel members to perform, the organisation must ensure that they help the intermediaries with the training of the personnel, supervision and encouragement. c) Manufacturers – Agent – Wholesaler – Retailer – Consumer: This is the longest indirect channel available to a firm. c. Two level channel – This type of channel is mostly seen in the consumer goods markets. Marketing distribution channel | TikZ example. The discounts substantially lower their cost compared to costs of single unit retailers. Answer: False Page: 61 Level of difficulty: Medium 100. Long-term success depends on marketing across these channels. Although it provides full control, this comes with a huge investment. Channel objectives are based on the requirements of the purchasers and users, the overall marketing strategy, and the long-run goals of the corporation. In cases when a company is just getting started, or an older company is trying to carve out a new market niche, the channel objectives may be the dominant force on channel choice. Purchaser willing to go to some inconvenience (time and distance) to locate the most acceptable brand. There are no intermediaries in the most direct channel (a zero-level channel). It is worthwhile to see what the competitors do before designing a distribution system. The marketing mix can be divided into four groups of variables commonly known as the four Ps: 1. Marketing Strategy: Key Concepts 4. B2B Marketing Roles: This diagram shows marketing channel strategies within a B2B organization. Marketing strategy is a long-term, forward-looking approach and an overall game plan of any organization or any business with the fundamental goal of achieving a sustainable competitive advantage by understanding the needs and wants of customers.. Scholars like Philip Kotler continue to debate the precise meaning of marketing strategy. An example of this type of system could include a large retailer such as Wal-Mart dictating conditions to smaller product makers, such as producers of a generic type of laundry detergent. Channel length can vary from zero to n in case of consumer goods. ii. As such, the use of intermediaries is mainly to make the goods available and accessible to target markets. For level of sales below X1 (as shown in the figure above) provider’s sales agency will have economic advantage over their own sales force. Given this, there is also a greater possibility of channel competition and conflict. The organizations marketing channel strategy should help inform decisions on the following issues. A conflict may arise on account of unclear roles and rights. b. Purchased only from a well-established, reputable dealer. h. Payment – The channel members also assume responsibility for the buyers honouring their payments to the sellers through banks and other financial instruments. Producers of services also need to think about distributing, i.e., making their services available to their customers. Multi-channel marketing occurs when a single organisation uses two or more marketing channels to reach the same or more than one market segment. Strategy Marketing Channel Strategy Getting the books marketing channel strategy now is not type of challenging means. Differentiate between different distribution intensity strategies, incorporating the modern digital storefronts into this consideration. Channel design refers to deciding on the type of distribution channel as well as the number of levels in the channel. Instead, most use intermediaries to bring their products to market. Sales tax variations from state to state may have been taken into consideration while deciding on retail outlets or showrooms for certain products for which the tax variation is large. c. Manufacturers retail shop. A channel strategy is a vendor's plan for moving a product or a service through the chain of commerce to the end customer. What makes your product/service different from everyone else's? For example, if an organisation sells to customers that are within the territory of the agents, this can lead to a conflict. Exclusive distribution strategies work best for firms that focus on low volume, high margin sales. This method of retailing is an efficient way to provide continuous service. More the spread of the market, more expensive it becomes to serve the market directly. This is also called as symbiotic marketing. They try to forge a marketing channel (or distribution channel)—a set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user. Discuss the various factors that affect channel choice. Because markets and the marketing environment are continually changing, the firm must be prepared to make channel revisions: individual members may be dropped or added, channels in specific markets may be modified, and, sometimes, the whole channel system may be redesigned. Hence, they are bound to be capital intensive; they are designed to achieve technical, managerial and promotional economies through integration, coordination and synchronization of marketing flows from the point of production to the point of final consumption. g. Ordering – This function is with regards to the communication of channel members regarding the intention to purchase. Channel strategy is relevant to all six of the basic distribution decisions faced by firms: 1) the role of distribution in the firm’s overall objectives and strategies, 2) the role of distribution in the marketing mix, 3) the design of marketing channels, 4) the selection of channel members, 5) management of the channel, and 6) evaluation of channel member performances. Wholesaling includes all activities required to market goods and services to businesses, institutions, or industrial users who are motivated to buy for resale or to produce and market other products and services. 4. In total, non-store retailing accounts for a relatively small percentage of total retail sales, but it is growing and very important with certain types of merchandise, such as life insurance, cigarettes, magazines, books, CDs, and clothing. A zero level channel – As the name suggests, in this type of a channel, there are no intermediaries or zero level of intermediaries. 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