Marketing Channels Chapter 5

What is channel strategy
broad principles by which the firm expects to achieve its distribution objective for its target markets
What are some distribution decisions
– role in overall objectives, marketing mix, design or mktg channels, selection of channel members, management of channel, evaluation of member performance
Channel strategy vs overall corporate objective
the higher the priority given to distribution, the higher the level at which it should be considered in formulating the organizations overall objectives and strategies
Does distribution increasingly warrant the attention of top management? Why
yes; becuase competition has made the issue of distribution too important for top management to ignore
When should you put emphasis on distribution strategy
– if its most relevant variable for satisfying target market
– paity exists among competitors in other three variables
– high degree of vulnerability exists because of competitors neglect of distribution
– distribution can enhance the firm by creating synergy from marketing channels
Why should firms stress distribution when it serves customers needs in the TARGET MARKET
marketing channels are so closely linked to customer need satisfaction becuae it is through distribution that firms can provide the kinds and levels of service that make satisfied customers

ex- starbucks

Why are distribution advnatages not as easily copied by competitors? (COMPETITIVE PARITY)
distribution advantages are based on a a combination of superiror strategy, organization and human capabilities

ex- wegamsn

If you have critical mass in a market, why do you own more per store?
economies of distribution
– makes distribution less expensive, sharing costs
Why do competitors neglect of distribution strategy provide excellent? (DISTRIBUTION NEGLECT)
the channel member must analyze target markets to determine whether competitors have neglected distribution and whether vulnerabilities exists that can be exploited
Why is “hooking up” with a mix of cooperative channel members strengthen the channel? (DISTRIBUTION AND SYNERGY)
becuase each channel member is an independent entity, rewarding opportunities exist for channel managers to cultivate cooperation among members

ex- high end manuf hooking up with high end retailer

What is differential advantage
Also called sustainable competitive advantage, occurs when a firm attains a long term, advantageous position in the market relative to competitors
Why do you what to position well in channel
a firm that plans the channel and makes decisions by viewing the relationship with channel members as a partnership or strategic alliance that offers recognizable benefits to the manufacturer and channel members on a long term basis
Because customers perceive channel members as an extension of the manufacturers own organization, members should:
– reflect channel strategies
– be consistent with the firm’s broader marketing objectives and strategies
– reflect the objectives and strategies of the organization as a whole

Ex Red Bull

Intensive –> Selective –> Exclusive

What are the 3 strategic questions
how close a relationship should be developed with the channel members

how should the marketing mix be used to enhance channel member cooperation

how should the channel memers be motivated to cooperate in achieving the manufacturers distribution objectives

What factors should you consider for closeness of channel relationships
-distribution intenstive (selective.. exclusive)
-targeted markets
-products
-comapny policies
-middlemen
-enviornment
-behavioral dimensions