This document enholds the summary and notes of each Marketing Channel Managment lectures, all modules. Every knowledge clips is included in this summary.
The summary of all papers is included in another document.
Module 1: Setting the Scene
Marketing channel: a set of organizations (I) that work together (II)
to make goods available (III) for end users (IV).
• Goods : FMCG (CPG), consumer durables, industrial
products, services
• End users : consumers and business consumers
Customers: retailer in CPG jargon.
Channels are:
- Universal, so are channel decisions. Behind every service/product: >= 1 channels.
- Important in economic terms. The total sales through channels is 1/3 of worldwide
annual GDP.
- Can be a source of competitive advantage. The creation of entry barriers.
Powershift from manufacturers → to retailers.
What fuels the rising power of retailers?:
- Mergers (becoming a bigger company)
- Multi-channel operations (Jumbo → pick-up point)
- Retailers becoming brands: private labels (eigen merken)
- Access to consumer data (klantenkaarten)
Cause of retail apocalypse: the shift to online. Reinforced by the great
recession, the shift to experience and the Covid-19 pandemic. And Amazon.
20% of all retail sales are occurring online.
Consumers 2.0: consumers want everything, right here, right now (fueled
by Covid-19), at the lowest cost and zero willingness to pay.
Module 2: Channel Design
2.1 Why go (in)direct?
,Why go direct?
→ Higher (gross) profit margin for manufacturer (even at a lower consumer price)
Why not go direct?
Why go indirect (middleman can add value)?
- Bulk breaking: allow buying in small lots.
- Time convenience: reduce waiting times.
- Assortment convenience: offer a wide variety of goods.
- Impact on sale
- Distribution costs: with middleman, the number of contact lines reduces, there is a
cost for each contact line.
You can do away with the middleman, but you can’t do away with the middleman’s
functions.
Not online / brick-and-mortar or direct / indirect, but find the right balance.
, 2.2 3P Marketplaces
Third party.
Online retailer:
- Gross profit: Gross margin * units sold
- Costs: inventory + fulfillment costs
Marketplace:
- Gross profit: commission * units sold
Step-in fee (minimal)
- Costs: administrative costs
Why do manufacturers sell on marketplaces?
- Huge consumer traffic: long-tail products, cross-border selling
- Quick launch: low set-up costs, no digital worries
3P marketplaces are larger and growing faster than omnichannel and pureplay business
models.
Pitfalls for retailers when expanding marketplaces:
- No control over prices
- No control over fulfillment
May lead to inconsistent delivery times, fees & return policies.
- No control over product presentation (manufacturers decide on this)
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