Chapter 1 Book Notes
Chapter 1 Book Notes 463
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This 3 page Class Notes was uploaded by David Kavalerchik on Friday January 29, 2016. The Class Notes belongs to 463 at University of Illinois at Chicago taught by Ann Trampas in Spring 2016. Since its upload, it has received 51 views. For similar materials see Marketing Channels and E-Commerce in Marketing at University of Illinois at Chicago.
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Date Created: 01/29/16
Intermediary: any channel member other than the manufacturer or enduser. Three types: Wholesaler, Retail and Specialized. Wholesalers: Sells to other channel intermediaries but not endusers. They take title and full possession of goods. Buy at wholesale price, sell for more downstream, pocket the difference. Specialized: enter channel to perform specific task; insurance, financing, CC companies are some examples. ____________________________________________________________________________ Why have marketing channels? Benefits to downstream channel members: Search Facilitation Sellers without an already established brand name would be unable to generate many sales. Sorting 1. Sorting citrus packing house sorts oranges by size and grade 2. Accumulation combines similar stocks from multiple sources 3. Allocation breaks supply down into smaller lots, helps downstream channel members handle the supply easier 4. Assorting builds up an assortment of products for resale Benefits to upstream channel members: Routinization of Transactions Amount, mode and timing of payment take time to negotiate for every purchase. Costs are minimized when this is routine, no wasting time on bargaining for prices. Leads to efficiency in the execution of channel activities. Continuous Replenishment Programs (CRP) Sends goods to retailer’s warehouses automatically. Manufacturers and retailers share stock info to ensure goods aren’t over/under stocked. Typically increases frequency of shipments but lowers the size per shipment. Fewer Contacts Without channel intermediaries every producer would have to interact with every potential buyer. tl;dr Marketing intermediaries reduce costs and add value to goods. ____________________________________________________________________________ Channel Strategy Framework 3 Stages; Analyzing & Designing, Benchmarking, Implementation. Stage 1: Analyzing and Designing Analysis Phase: EndUser Analysis segmenting/targeting enduser groups. Segmentation: splitting a market into groups of endusers who are either maximally similar to one another and maximally different from other groups of end users. Value Added services created by channel members and consumed by end users together with the product purchased represent service outputs. Service outputs include bulk breaking, spatial convenience, waiting and delivery time, assortment and variety, customer service, product/market/usage information sharing. Channel Analysis auditing channels and identifying channel gaps. Channel management should rely on efficiency and gap analysis templates to perform their evaluation. This template codifies information about the importance of each channel function in both cost and value terms as well as about the proportion of each function performed by each channel member. This produces normative profit share for each channel member. It tells you the proportional value added to the total channel’s performance by each channel member. Normative Profit Share Answers the question, “How much value is this channel member contributing?” Next, managers find the service and cost gaps. Make vs Makeorbuy Analysis determining if channel functions should be done in house or outsourced to channel partners. Should the firm integrate vertically by performing both upstream and downstream functions? Or should outsourcing apply to either distribution or production or both? Decision Phase: Design Channel Structure & Strategy focuses on making 3 key decisions: (degree of channel intensity, mix/identity of channel types, and use of dual distribution) Also closing service and cost gaps. Stage 2: Benchmarking Compares newly designed or revised channel structure and strategy against the most common channel structures and strategies. The 3 most notable channel systems are retailing, wholesaling, and franchising systems. Stage 3: Implementing Addresses 5 key success factors for effective channel management; ● Power ● Conflict ● Relationships ● Policies and Legalities ● Logistics Channel Power A channel member's power is its ability to control the decision of variables in the marketing strategy of another member in a given channel at a different level of distribution. Channel Conflict Generated when one channel member’s actions prevent the channel from achieving its goals. 3 Types of Conflicts: goal, domain, and perceptual conflict. Channel Logistics Involves processing and tracking factory girls throughout the channel, during warehousing, inventory control, transport, customs documentation, and delivery.
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