Chapter 12: Designing and Managing Integrated Marketing Channels

Chapter 12: Designing and Managing Integrated Marketing Channels

Marketing Channels and Value Networks

• ·         Marketing channels- sets of interdependent organizations participating in the process of making a product or service available for use or consumption.

The importance of Channels

• ·        Marketing channel system- is the particular set of marketing channels a firm employs, and decisions about it are among the most critical ones management faces.
• ·         Marketing channels must not just serve markets, they must also make them.
• ·         Push strategy- uses the manufacturer’s sales force, trade promotion money, or other means to induce intermediaries to carry, promote, and sell the product to end users.
• ·         Pull strategy- the manufacturer uses advertising, promotion, and other forms of communication to persuade consumers to demand the product from intermediaries, thus inducing the intermediaries to order it.
• ·         Top marketing companies such as Coca-Cola and Nike skillfully employ both push and pull strategies.

Multichannel Marketing

• ·         Multichannel marketing using two or more marketing channels to reach customer segments in one market area.
• ·         Research has shown that multichannel customers can be more valuable to marketers.

Integrating Multichannel Marketing System

• ·         Omnichannel marketing- in which multiple channels work seamlessly together and match each target customer’s preferred ways of doing business, delivering the right product information and customer service regardless of whether customers are online, in the store, or on the phone.
• ·         Integrated marketing channel system- the strategies and tactics of selling through on channel reflect the strategies and tactics of selling through one or more channels.
• ·         Adding more channels gives companies three important benefits:

1.      Increased market coverage

2.      Lower channel cost

3.      The ability to do more customized selling.

• ·         However, new market channels typically introduce conflict and problems with control and cooperation.

Value Networks

• ·         Demand chain planning- when a company first thinks of the target market and then designs the supply chain backwards from that point.
• ·         Value network- a system of partnerships and alliances that a firm creates to source, augment, and deliver its offerings.
• ·         Demand chain planning yields several insights:

o   The company can estimate whether more money is made upstream or downstream, in case it can integrate backward to forward.

o   The company is more aware of disturbances anywhere in the supply chain that might change costs, prices, or supplies.

o   Companies can go online with their business partners to speed communications, transactions, and payments; reduce costs; and increase accuracy.

The Digital Channels Revolution

• ·         The digital revolution is profoundly transforming distribution strategies
• ·         Customers want the advantages of digital-vast product selection, abundant product information, helpful customer reviews and tips- and of physical stores- highly personalized service, detailed physical examination of products, an overall event and experience. They expect seamless channel integration so they can:

o   Enjoy helpful customer service in store, online, or on the phone

o   Check online for product availability at local stores before making a trip

o   Find out in-store whether a product that is unavailable can be purchased and shipped from another store or home.

o   Order a product online and pick it up at a convenient retail location

o   Return a product purchased online to a nearby store of the retailer

o   Receive discounts and promotional offers based on total online and offline purchases